Labour calls on Osborne to limit RBS bonuses
Government pressed to use its 81% stake in RBS to block bonuses of up to twice the size of salaries
LABOUR has called on George Osborne to clamp down on bonuses for bankers at the Royal Bank of Scotland.
The Government is under pressure to use its 81 per cent stake in RBS to prevent the bailed-out bank from paying out bonuses of up to twice the size of its bankers' salaries.
Under a new EU law, bonuses for top bank staff cannot exceed the size of their salaries, unless they ask for shareholders' approval. Labour has tabled a Commons motion calling on the Government – RBS's biggest shareholder – to reject any such request.
They will argue that the taxpayer-owned bank should not be permitted to pay out such huge bonuses at a time when ordinary families are facing a "cost-of-living crisis".
The Times describes Labour's demands as "a major escalation of the party's hostilities towards the banking sector".
RBS has significantly shrunk its investment banking division and will pay out a smaller bonus pot than many of its rivals, says the Financial Times. "Nevertheless Ross McEwan, its new chief executive, is heading for a particularly thorny showdown over bonuses, given that RBS is still heavily loss-making and has been accused of treating small businesses poorly," says the newspaper.
RBS said yesterday that "no decisions have been made" about bonuses.
Meanwhile, the Treasury has already launched a separate legal challenge arguing against the EU's right to set any limits on banking bonuses at all. Osborne believes that such intervention could lead to an increase in base pay and undermine financial stability.
Labour leader Ed Miliband is also expected to propose a cap on the size of UK banks in a bid to increase competition in the domestic market. Miliband looks likely to try to bring in a market-share cap – limited to around 20 to 25 per cent – if a Labour government was elected.