Chancellor of the Exchequer George Osborne announced an agreement by Britain’s biggest banks that they’d pay lower bonuses, drawing criticism from his own party and the opposition that it would have no real effect.
Lloyds Banking Group, Barclays, HSBC Holdings and Royal Bank of Scotland (RBS) will pay lower bonuses than last year, Osborne said, though he gave no details. They will disclose the remuneration details of their five most senior employees below board level, without naming the individuals. The announcement came a day after the chancellor raised tax on the industry by £800 million ($1.3 billion).
“Britain needs to move from retribution to recovery,” Osborne told the House of Commons in London. “The banks will lend more money, especially to small businesses, pay more taxes and pay smaller bonuses, be more transparent about bonuses they do pay and make a greater contribution to our regional economy.”
The deal follows two months of talks during which ministers have wrangled with bank chiefs over demands for lower bonuses as the government raises taxes and reduces spending to narrow a record budget deficit. Barclays CEO Robert Diamond said on January 11 the time for “apologies and remorse” from banks following the financial crisis was over. Britain’s bankers learn the size of their bonuses this month and next.
Following the negotiations, known as Project Merlin, Lloyds, HSBC, RBS and Barclays and Banco Santander UK also agreed to make loans of at least £190 billion to companies to help bolster the economic recovery, Osborne said.
