UK FINANCIAL Investments (UKFI) boss John Kingman yesterday warned the agency was “walking a tightrope” as it attempted to limit bonus payments while avoiding an exodus of talent at Britain’s bailed out banks.<br /><br />The public was “understandably angry” at fat cat bonus payments, said Kingman, the departing chief executive of the body managing the government’s stake in the banks.<br /><br />“We have to walk a tightrope in which we reform the cultures of the banks, but we cannot afford to be in a position where the banks lose so many people that we start to lose serious value,” he said. <br /><br />His comments came as Stephen Hester, chief executive of Royal Bank of Scotland (RBS), wrote a letter to staff saying the bank would not be paying cash bonuses to employees who earn more than £39,000 until at least 2012. <br /><br />The emphasis on share awards will enable staff “to participate in, and benefit from, the recovery of RBS group”, Hester wrote. However, there are fears that disgruntled RBS and Lloyds bankers, unhappy at the loss of their cash bonuses, will look to move to competitors. <br /><br />One London-based headhunter told Financial News that he had received more than 150 CVs from RBS staff since news of the break-up broke on Tuesday morning, while another said he was fielding a large number of calls from bankers wanting to quit.<br /><br />Kingman, who is leaving UKFI for a career in the private sector, faced a heated grilling from members of the Treasury select committee yesterday amid accusations that it was “business as usual” for the banks. He refused to reveal the level of bonus pots at RBS, which is 84 per cent owned by the government, but he said: “I think the public has every right to expect us to ensure it is not business as usual.”<br /><br />Bonuses at RBS were “vastly lower” in 2008 than in previous years, but were based on a need to protect the public’s investment, he said.<br /><br />“We will only sanction what (the banks) are proposing to pay as bonuses if we think it is in taxpayers’ interest to do that,” he said.<br /><br />Kingman said he nevertheless expected banks to meet their lending commitments. “If we thought they were not going to, we would get very heavy with them,” he said.<br /><br />UKFI had pressed and encouraged banks such as RBS to face up to their losses, but recovery depended ultimately on the economy and it would take time, he added.