NICK Clegg, the leader of the Liberal Democrats, yesterday said his party would ban all bank bonuses at board level.
Speaking alongside his Treasury spokesman Vince Cable, Clegg said the Lib Dems would “ensure the bonus system can never again encourage banks to behave recklessly”.
Clegg, who could play kingmaker after the election if polls pointing to a hung parliament are correct, also said cash bonuses would be capped at £2,500.
All other variable remuneration would be paid in shares that only vest after five years.
The pledge to ban bonuses for board members at all banks – even those that did not accept taxpayer support during the financial crisis – is actually a softening of the party’s position.
In an interview with City A.M. in February, Clegg said he would introduce a “fatwa on bonuses” for all staff taking “long-term strategic decisions” – including some investment bankers.
The Lib Dems also said they would overhaul the Financial Services Act to ensure that no regulated financial institution that has made a loss can pay any of its staff a discretionary bonus.
And the party would force banks to publish the names of all staff that are paid more than the Prime Minister, who earns just under £200,000.
In a bid to stop institutions from flouting rules on executive pay, it would give the FSA powers to fine the directors of banks that break its existing code on remuneration.
Angela Knight, chief executive of the British Bankers’ Association, said that banks in the UK were already subject to rules on remuneration that were “more stringent than in any other country”.
She added: “If we want to say goodbye to these banks – which will eventually help us to recovery – then we put the UK more in debt and hock.”