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Low pay for UKFI bosses

SEVERAL board members in charge of UK Financial Investments (UKFI) &ndash; the body charged with managing the government&rsquo;s stakes in Royal Bank of Scotland and Lloyds Banking Group &ndash; are earning nothing for their time, it emerged yesterday.<br /><br />UKFI revealed in its annual report that acting chairman Glen Moreno is not taking a salary for his work while the organisation hunts for a new chairman.<br /><br />Former chairman Philip Hampton also performed the role for free, while board member Lucinda Riches will earn just &pound;37,500. Chief executive John Kingman, on secondment from the Treasury, picks up a civil servant&rsquo;s wage of &pound;143,000 a year.<br /><br />None of the UKFI directors are eligible for a pension and none of them will pick up a bonus for their efforts.<br /><br />However, more junior staff, including head of market investments John Crompton and chief operating officer Sam Woods, will earn performance-related pay.<br /><br />UKFI revealed yesterday it is sitting on paper losses of some &pound;10.9bn on the holdings it received in exchange for a combined cash injection of &pound;34.5bn into the banks.<br /><br />Those stakes are likely to increase once the government&rsquo;s Asset Protection Scheme (APS) &ndash; which insures banks against falling asset values &ndash; kicks in.<br /><br />The banks&rsquo; use of the APS could leave the Treasury with more than 80 per cent of RBS and more than 60 per cent of Lloyds.<br /><br />Kingman said the government would have to hold the stakes &ndash; which equate to a &pound;3,000 investment from every UK household &ndash; for &ldquo;several years&rdquo; to ensure the best return for the taxpayer, although Moreno hinted at an early sale of some shares.<br /><br />Kingman said the most likely outcome was that the government would gradually sell portions of its stakes as the market improves, via institutional placements or public offers.<br /><br />But he said UKFI would also consider allowing banks to buy back the holdings, or opt to sell down its stakes using exchangeable bonds.<br /><br /><strong>INVESTMENT BANKS AWAIT THE CALL</strong><br />UKFI&rsquo;s head of market investments John Crompton said the organisation was hoping to receive free advice, research and analysis from investment banks to help it manage its stakes in RBS and Lloyds.<br /><br />UKFI officials believe that banks will provide their services free of charge in return for being added to a stable of firms employed to advise on the sale of bank stakes.<br /><br />Crompton said: &ldquo;UKFI is not currently paying to use investment banking advisers. We do expect to use investment banks when we make transactions, and will also want ongoing advice and ideas as we fulfil our remit. We will set out our approach to using investment banking advisers in due course.&rdquo;