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Banking: Bonuses

Volume 716: debated on Tuesday 5 January 2010

Questions

Asked by

To ask Her Majesty's Government what plans they have to follow the governments of the United States and certain European Union member states in ensuring effective cuts in salaries and bonuses for senior directors and executives of banks in receipt of public money. [HL262]

The banks in which the Government are a shareholder are managed on an arm's-length commercial basis by UK Financial Investments (UKFI), which is wholly owned by the Government.

UKFI is working with the banks as a shareholder to ensure they offer incentives based on the Government's remuneration principles and to protect the interest of the taxpayer. In return for taxpayer support provided, both banks have agreed: not to pay discretionary cash bonuses in relation to 2009 performance to any staff earning above £39,000; and executive board members will defer bonus payments due for 2009 until 2012, to ensure that their remuneration is better aligned with the long-term performance of their banks. “UKFI has worked with these banks to implement among the most far reaching reforms of any large bank in the world”.

As regards remuneration practices in the wider banking sector, the Government and FSA are implementing the FSB Standards agreed by G20 members at the Pittsburgh summit. These include benchmark requirements for the structure of remuneration and will ensure there is a consistent international approach. In addition, the Government have announced that where bank (and building society) employees are awarded discretionary bonuses, in whatever form, above £25,000 in the period from the Pre-Budget Report to 5 April 2010, the banks paying these bonuses will pay an additional bank payroll tax of 50 per cent on the excess bonus over £25,000.

Asked by

To ask Her Majesty's Government what recent discussions they have had with directors and executives of banks about the level of bonuses they set. [HL917]

Treasury Ministers and officials have meetings with a wide variety of organisations in the public and private sectors as part of the process of policy development and delivery. As was the case with previous Administrations, it is not the Government's practice to provide details of all such meetings.