EXECUTIVE PAY
Rescue plan for banks means curbs on executive pay
HM Treasury has today announced that Britain's largest banks are to be "part-nationalised" as part of a monumental, multi-billion pound rescue package designed to avert a banking collapse.
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The rescue plan suggests the government has insisted on a crackdown on the pay packages of top banking executives in return for rescuing them. The BBC reported: “To participate in the scheme banks will have to sign up to an FSA agreement on executive pay and dividends."
The Treasury said:
“If the Government is to provide the capital, the issue will carry terms and conditions that appropriately reflect the financial commitment being made by the taxpayer. In reaching agreement on capital investment the government will need to take into account dividend policies and executive compensation practices and will require a full commitment to support lending to small businesses and home buyers.”
The lenders that have confirmed they will take part in aspects of the scheme are Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland and Standard Chartered.
The Treasury said that other banks and building societies would be able to apply for inclusion in the plan.
Key quotes
At a press conference Chancellor Alistair Darling was asked what level bankers' bonuses would be "capped" at. He replied it would be "frankly ridiculous" for the government to decide on bonuses but the Financial Services Authority would be drawing up a code looking particularly at incentives.
Conservative leader David Cameron said "no directors" of banks taking advantage of the bail-out package should get a bonus this year.
Want to know more?
To read the full text of the statement visit the HM Treasury web site at www.hm-treasury.gov.uk/press_100_08.htm.