Despite a campaign by some politicians, who have called for banks to reveal how many employees receive over £1m in pay, divisions among banks make it unlikely that an agreement will be reached.
Banks with a high portion of their revenues drawn from abroad – including HSBC, Barclays and Standard Chartered – have argued that revealing how many employees receive over a certain threshold would cause less well-paid employees to demand pay rises, causing wage inflation. They say that such rules should only be implemented if they are global to ensure “a level playing field”.
Instead, banks will commit to increase their lending to small businesses by some £10bn.
However, a lack of cooperation on pay transparency is likely to stir divisions within the coalition government. The Liberal Democrats have championed transparency.
Lib Dem Treasury spokesman Lord Oakeshott said yesterday: “We are not going to be blackmailed.” He added that “the bonus problem... is the number one item in our coalition agreement”.
He also emphasised the difference between the Tories’ position and that of his party, saying: “David Cameron is a Conservative prime minister, but that doesn’t mean we’re not going to implement the coalition agreement.”
Further action on bankers’ pay has been championed by business secretary Vince Cable, but he is keeping a low profile after making unguarded statements about Rupert Murdoch to undercover reporters in December.