Minister urges bonus restraint
Banks are being urged to show compassion when allocating bonuses this year – in light of the cost-cutting measures in the public and private sectors.
Financial Secretary to the Treasury, Mark Hoban, said banks need to be mindful during the forthcoming bonus season – at a time when pay restraints are being implemented across the rest of the economy.
Mr Hoban also confirmed the Government is looking at ways to tax banks’ profits.
Addressing an annual dinner of the British Bankers’ Association (BBA) at Mansion House, the minister said: “We have the opportunity to send a clear message to the public that the banking system now operates in a way that is fair and stable and no longer rewards employees based on short-term performance whilst leaving investors and taxpayers exposed to the long-term risks.”
He added that by “visibly reforming the way they operate, banks can show they exist to serve the whole economy, not just their own interests”.
However, the controversial subject of bonuses was defended by Angela Knight – the BBA’s chief executive, who said bonuses in the UK were already regulated and were assessed against “proper performance figures”.
Speaking to BBC Radio 4′s Today programme, Ms Knight said: “The whole question of pay was put into regulation last year. The only country in the G20 to do it was here in Britain.”
She added: “We bear certainly part of the responsibility [for the government deficit]. “We bear the banking part.”
Meanwhile, Mr Hoban said the Government is proposing to introduce two new taxes on banks: The first being a “bank levy” and the second a “financial activities tax”.
Both taxes were originally raised by the International Monetary Fund earlier this year and are to be adopted by Governments throughout the world.
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