Bloomberg News

U.K. Making Case for RBS, Lloyds ‘Responsibility’ on Bonuses

January 12, 2012

(Updates with Myners, Umunna comments starting in fourth paragraph.)

Jan. 12 (Bloomberg) -- The U.K. government will make the case for “responsibility” in bonuses awarded by state- controlled Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, Prime Minister David Cameron’s spokesman said.

“We want to see responsibility in the setting of bonuses and we will be making that very clear to RBS and Lloyds in discussions we have,” Steve Field told reporters in London today. “RBS have taken no decision on this and there are going to be discussions in the coming weeks.”

Cameron, who attacked the bonus culture at banks while in opposition, is under pressure to deliver lower payouts at RBS and Lloyds at a time when Britons are enduring the biggest squeeze on living standards since the 1970s.

Paul Myners, a Treasury minister in the previous Labour government, questioned earlier today why bankers were receiving bonuses at all “when they cannot generate enough profits to provide return on equity.” Of Cameron, he asked “is he going to take a strong line on RBS bonuses or isn’t he?”

Myners said Cameron should insist Lloyds continue its efforts to claw back some of the 1.45 million pound ($2.2 million) bonus awarded to former Chief Executive Officer Eric Daniels last year after the bank set aside 3.2 billion pounds to settle claims clients were improperly sold insurance.

‘North Korean Approach’

Taking part in a panel discussion in London on high pay after a speech by Labour’s business spokesman, Chuka Umunna, Myners said companies “take a North Korean approach” to the way independent directors are elected to boards, with every candidate always elected after they are “selected by the party leader -- the company chairman.”

Umunna said Labour backs proposals from the High Pay Commission, a group sponsored by party supporters, for simpler and more transparent executive pay, including requiring public companies to report the details of their 10 highest-paid employees.

“I believe in shareholders’ democracy but democracy is about more than voting,” Umunna said. “If we are to empower shareholders, they need information provided through greater transparency of boardroom pay, as well as the means to mobilize and become more active in the running of their companies.”

--Editors: Andrew Atkinson, Eddie Buckle

To contact the reporters on this story: Thomas Penny in London at tpenny@bloomberg.net; Robert Hutton in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: Eddie Buckle at ebuckle@bloomberg.net


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