15th Jan 2014 15:25
LONDON (Alliance News) - Prime Minister David Cameron Wednesday told MPs that the Government would block any move by Royal Bank of Scotland Group PLC, in which the state has an 82% stake, to increase cash bonuses beyond GBP2,000.
Speaking in response to Labour party leader Ed Miliband at Prime Minister's Questions, Cameron also said he would block any request by the bailed-out lender to increase its overall pay and bonus pool.
Under new EU rules, banks are not allowed to pay bonuses exceeding 100% of an employee's basic salary, but shareholder approval can be sought to increase that figure up to 200% - three times a banker's basic salary.
But while Cameron did pledge to maintain the limit on cash bonuses at GBP2,000, he made no mention of share award bonuses.
"We will continue with our plans for RBS that have seen bonuses come down by 85%, that has seen the bonus pool at one third of the level that it was under Labour," Cameron told the Commons.
Miliband said bonuses of 100% on multi-million pound salaries were "quite enough", and urged the Government to prevent RBS from paying out more than that.
In a motion tabled Wednesday, the Labour Party called on the Government to rein in excessive bonuses as the UK continues to suffer in the aftermath of the financial crisis.
The motion, tabled by opposition members including Miliband and Shadow Chancellor Ed Balls, said the banking sector needs, "real reform and competition so that the UK can earn its way out of the cost of living crisis."
The Government has come under increasing pressure to rein in "excessive bonuses in Britain," especially after Chancellor Osborne last September launched a legal challenge to the EU's cap on bonuses.
Opponents to the cap on bonuses say it will result in higher fixed salaries for bankers and even prevent banks from recruiting the very best talent in the industry.
A spokesperson at RBS told Alliance News, "No decisions have been taken, we are consulting with our shareholders in the normal way."
Shares in RBS were trading at 376.6 pence per share, up 1.9% Wednesday afternoon.
By Samuel Agini; [email protected]; @samuelagini
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