“POLITICS OF ENVY IS BACK” *****

STARRING
DAVID CAMERON ● ALAN JOHNSON ● STEPHEN HESTER ● BOB DIAMOND


POPULIST banker bashing is set to make a dramatic return this week, ahead of a politically sensitive bonus round in the City.

Alan Johnson, the shadow chancellor, yesterday accused the coalition of “standing idly by” while bankers awarded themselves big bonuses, as Labour gears up to win political points on the hot button issue.

Meanwhile, John Mann, a Labour MP on the influential Treasury select committee, plans to use tomorrow’s high-profile hearing with Bob Diamond to demand the Barclays chief waive his bonus this year.

An anti-bonus campaign is sure to win support from certain sections of the media and trade unions, leading to an uncomfortable period for the industry as details of individual bonus packages emerge.

David Cameron yesterday warned he wanted to see a “lower bonus pool than last year’s”, although he insisted that any settlement had to “recognise that a successful banking sector is part of a successful market economy”.

The Prime Minister’s more moderate tone signifies a shift in Downing Street’s approach to bonuses. Yesterday, a Number 10 source told City A.M.: “There’s a recognition there’s only so much you can do when it comes to private banks. Having a constant war with the banks isn’t helpful.”

Stephen Hester, chief executive of part-nationalised RBS, is already said to be prepared to receive a bonus solely in shares, rather than cash.

Tough new European rules implemented by the Financial Services Authority last month prohibit the payment of more than 50 per cent of a bonus up-front. The new rules mean that the EU now has the strictest bonus regime in the world.