Labour Pressures Government to Block RBS Request for Doubling Bonus Cap

"At a time when families face a cost-of-living crisis and bank lending to business is falling, it cannot be right for George Osborne to approve a doubling of the bank bonus cap"

Labour’s Chris Leslie says that the Autumn Statement is a long-term plan to tackle the cost of living crisis and should “earn our way to higher living standards for all, not just a few at the top.” (Photo: Labour) — Chris Leslie MP, Labour's shadow chief secretary to the Treasury.

According to media reports, RBS and other banks are expected to invoke an EU rule that allows bonuses of up to double an employee's salary, provided these are approved by shareholders

The European Commission installed a new limit on bankers' bonuses, which means extra pay will be capped at 200% of their salary.

The law, which comes into force from January 2014 and will apply to bonuses paid in 2015.

"At a time when families face a cost-of-living crisis and bank lending to business is falling, it cannot be right for George Osborne to approve a doubling of the bank bonus cap," said Chris Leslie MP, Labour's shadow chief secretary to the Treasury in a statement.

"It shouldn't have taken the EU to act to rein in excessive bonuses, but there has been no action from the Chancellor here in Britain."

RBS received a taxpayer funded £45bn (€54bn, $74bn) bailout in 2008 which eventually led it to be 81% owned by the government.

RBS's bonus pool for bankers is tipped to reach £500m for 2013 despite the embattled lender being fined for Libor fixing, undergoing a major change in management, significant IT problems and a renewed crisis over its treatment of small to medium enterprises across Britain.

Reports say that a handful of executives at RBS could see their monthly wage almost double to compensate for the new European Union bonus rules.

Although basic salaries have dropped since 2008, the average annual pay per head at the markets business stands at £108,000, which is based upon pay in the first three quarters of 2013.

In 2009, RBS bankers were, on average, earning £174,000 a year.

"As the majority shareholder, the government should reject any request from RBS to increase the cap. We will put this to a vote in the House of Commons as part of our opposition day debate on the Government's wider failures on banking," said Leslie.

"The case for repeating Labour's tax on bank bonuses, to fund a compulsory jobs programme for young people, is getting stronger by the day."

George Osborne