Clegg demands sensitivity on pay from Lloyds and RBS

NICK Clegg warned state-owned banks yesterday that they must show “sensitivity” to public opinion when awarding bonuses this year.

The Deputy Prime Minister was keen to emphasise that the government would use its role as a majority shareholder in Royal Bank of Scotland and the biggest minority shareholder in Lloyds Banking Group to prevent bonuses that would generate public outrage.

“These state-owned banks wouldn’t be in existence if it weren’t for the generosity of the taxpayer,” he said. “The directors of those banks have been asked to do a job, to fix those banks and make them healthy again. That job isn’t complete yet and until it is, that should be reflected in remuneration.”

Targeting bonuses at Lloyds and RBS comes as the government avoids taking strong action on private banks.

This marks a shift from the Liberal Democrats’ position before the election, when business secretary Vince Cable said there was little difference between state-owned and private banks due to implicit government backing for whole of the industry.

“The state-owned banks have to listen to us because they’re nationalised. In any normal sector, these companies would have long gone bankrupt and no longer existed,” Clegg added.