Show Hide image

Bankers' bonuses reach billions despite new laws

UK banks are expected to pay out £7bn in bonuses this year.

UK banks are expected to pay out £7bn in bonuses this year.

Banks could pay out millions in bonuses this year, despite the government's call to reign in such payments.

Bankers are expected to receive a total of £7bn in bonuses this year, paid out by taxpayer-owned banks such as RBS.

The government, and in particular the business secretary Vince Cable, has expressed concern over bankers' bonus culture in the past, promising "robust action" in curbing the rewards.

Although the bonuses have been cut down, BBC correspondent Robert Peston said: "The best the coalition can hope for is a declaration from the banks that they will pay out less than they would have without government intervention."

But a senior banker said that any commitments by the banks to reduce bonuses "could be more spin than substance".

UK banks have been re-balancing pay packages to comply with European laws agreed on last summer. But smaller firms, including some banks as well as hedge funds and asset managers, will be exempt.

"At a time when the incomes of most British people are being squeezed by low nominal pay rises and inflation, some will doubtless argue that bankers' bonuses remain unacceptable," said Robert Peston.

However, the banks argue that they cannot dramatically reduce bonuses without the risk of losing top staff to banks based overseas, which are under less pressure to cut the payments.

The government has asked for an increase in lending to small businesses in an effort to boost the economy, but banks claim to be under pressure to keep cash at hand as a way of insuring themselves agains future crises.