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Banking Industry

Volume 487: debated on Thursday 12 February 2009

9. To ask the Chancellor of the Exchequer what his policy is on the remuneration packages for senior executives of banks which are in temporary public ownership or which have received recapitalisation funding from the public purse; and if he will make a statement. (256290)

For those banks that we recapitalised last October there were conditions imposed in relation to bank lending and restrictions on rewards for senior executives and on payment of dividends.

17. To ask the Chancellor of the Exchequer what assessment he has made of the effect on bank lending policies of his recapitalisation of the banks. (256299)

The measures that the Government announced on 8 October were to ensure the stability of the financial system and to protect ordinary savers, depositors, businesses and borrowers.

The Government’s recapitalisation scheme has helped to reduce the inter-bank lending rate, and the cost of insuring inter-bank lending through credit default swaps. As a result the price of wholesale funding—the money the banks use to finance lending to their customers—has come down considerably.

As part of their investment, the Government have agreed with the banks supported by the recapitalisation scheme a range of commitments, including on lending.

19. To ask the Chancellor of the Exchequer what his policy is on remuneration packages for staff of banks which are in temporary public ownership or which have received recapitalisation funding from the public purse. (256301)

UK Financial Investments (UKFI) has been set up to manage the Treasury’s shareholding in recapitalised banks. UKFI has a role in scrutinising banks compliance with the recapitalisation conditions, and also in scrutinising banks remuneration policies—to protect the interests of the taxpayer as a major shareholder.

The Government have rightly been closely involved in decisions on rewards for senior executives—those who made the decisions that brought the banks into difficulty. We have ensured that none of the banks accessing the recapitalisation scheme will award cash bonuses for 2008 to board members.

20. To ask the Chancellor of the Exchequer what assessment he has made of the effect on bank lending policies of his recapitalisation of the banks. (256302)

I refer the hon. Gentleman to the answer I gave the hon. Member for Stourbridge (Lynda Waltho) today (256299).