In a classic case of state intervention begetting state intervention:
Executives at RBS, which is 70 per cent owned by the state, are pushing to pay their staff nearly £1 billion in bonuses, even though the bank needed a £20 billion capital injection from the Government to prevent its collapse last year.
Opposition parties have said such bonuses should be blocked, but ministers have said they may be unable to stop the payments.
Alistair Darling, the Chancellor, said on Sunday there are “contractual problems” as some bankers have contracts that entitle them to a bonus.
That has left ministers trying to shame bankers into giving up their bonuses.
Speaking in London, the Prime Minister insisted that the Government is acting to bring about a fundamental change in the way bankers are paid.
Gordon Brown says, “In the future there must be rewards for success – but long-term sustainable success and not just short-term gains,” and Vince Cable asks for a new bonus framework which ensures bonuses are payable in shares that are not redeemable within five years, but what do they think was already in place? Bonus schemes were typically 50:50 cash and shares.