NESS secretary Vince Cable is on the warpath over bankers’ bonuses, announcing yesterday that he doesn’t care if tougher rules cause an exodus of financial firms from the UK.
“We’re not going to be bullied,” he said, in relation to companies’ threats to leave the country due to an inability to recruit top talent. He added: “You can’t just give in the whole time.”
Cable’s comments come as RBS, which is 84 per cent taxpayer-owned, is said to be trying to strike a deal to award cash bonuses of £50,000 to its investment bankers, as opposed to last year’s limit of zero.
Cable says that the current situation is “quite scandalous” and that he wants tougher transparency rules so that financial institutions are forced to publish more information about how they pay their top earners.
“I’m committed to having better disclosure,” he told City A.M. Over the weekend he said the government needed to “start shining light on what’s actually going on at the top of the leading banking institutions [because] if you keep people in the dark, you grow poisonous fungus.”
If Cable does push for further rules on bankers’ pay, the measures would come on top of recent EU rules that make Britain’s bonus rules the most stringent in the world.
British Bankers’ Association chief executive Angela Knight told City A.M.: “It’s a very tough, aggressive regime, which hasn’t always been reflected in political remarks.”
The new rules, which come into effect in January, mandate that no more than 20 to 30 per cent of any bonus is paid in cash up front, with at least 50 per cent to be paid in shares and 50 per cent of the whole bonus deferred and paid over several years.
Cable and chancellor George Osborne are meeting with banks today to review their remuneration practices, but Whitehall sources say there is a growing rift between Cable and the Treasury, with Osborne not planning any further measures beyond a £2.6bn bank levy.
The chancellor had originally talked up the idea that banks should be forced to disclose how many employees are paid over £1m, but rowed back from that position when it became clear that it would be hard to get an international consensus on the issue.
Banks such as HSBC, Lloyds and Standard Chartered have indicated that they would be cooperative with further disclosure rules, but it is understood that Cable could face some opposition from Barclays, whose remuneration committee meets tomorrow.