‘Emergency steps’

In a speech at Reuters, in Canary Wharf, the shadow chancellor is expected to say the Treasury and Financial Services Authority will be urged to ban big cash bonuses being paid to bankers.
It is thought that the Conservatives would seek to protect bonuses of less well paid staff who work in bank branches, so would allow bonuses of less than £2,000 to be paid.
The measure, described by the Tories as an “emergency” plan, would be temporary, and would work alongside the new agreement signed by the banks and the FSA.
And it would only apply to High Street retail banks, which means investment banks would be exempt.
However, the proposed change would apply to the investment arms of banks that also lend to consumers.
Mr Osborne is expected to say “emergency steps” need to be taken “to support bank lending and move the economy forward”.
It is thought he will tell his audience: “The cash that would have been paid out should be put onto banks’ balance sheets explicitly to support new lending.
“This should be a condition of continuing to receive taxpayer guarantees and liquidity support. I am not insensitive to the need of Britain’s banks to remain competitive and retain their most talented staff.”
BBC political correspondent Laura Kuennsberg says Mr Osborne will say that where banks want to pay bonuses to senior staff, those bonuses should take the form of “new equity capital”, by which he means “shares in the business”.
The head of the FSA, Lord Turner, expects banks very soon to spell out how their bonuses will be divided up.
The Treasury has criticised Mr Osborne’s demands as posturing.
Liam Byrne, chief secretary to the Treasury, said: “Mr Osborne’s hypocrisy beggars belief.
“The Tories have fought against every plan we’ve delivered to support jobs and businesses. And if we withdraw support now, as Mr Osborne wants, the recession will be longer and deeper.
“We have already introduced the toughest bank remuneration policy in the world. We have stopped short of banning all bonuses for retail banks because it is unworkable, but we are presently negotiating with RBS and Lloyds on the payment of 2009 bonuses”.