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Staff at a bank bailed-out by the taxpayer are likely to receive some bonuses, Chancellor Alistair Darling indicated today, as pressure increased for any payments to be halted.
Mr Darling insisted “absolutely no figure” had been agreed with Royal Bank of Scotland after it was reported to be proposing a package totalling £1 billion.
But he accepted that “contractual problems” and the right of staff other than those involved in “excessive risk taking” to be rewarded would rule out a total ban.
“I have spoken to the chief executive of RBS and I have made it clear, and he agrees, that no-one that is associated with these large losses should be allowed to walk away with large cash bonuses,” he told the BBC.
“Obviously there are contractual problems with some staff and your average teller across the counter...they are not terribly well paid and I don’t think anyone would quarrel with making sure they are properly rewarded.”
“As RBS has said, they want to make sure they cut down these payments to the absolute minimum. They have to understand that these banks would not be here but for the British taxpayers, therefore they have to show the degree of restraint that people would expect.”
That put the Chancellor, who also announced there would be an independent review into banking practices such as bonuses, on a collision course with former deputy prime minister John Prescott who wants an outright ban.
Mr Prescott said any bonus payments at the bank, which is propped up by a £20 billion taxpayer cash injection, would be “morally and economically outrageous”.
And he appealed to supporters of all political parties to use “people power” to force a rethink by joining an online campaign on social networking site Facebook against what he dubbed “raw capitalism”.
RBS, now 68%-owned by the Government, is due to report its 2008 results in three weeks, when it will confirm a loss of several billion pounds.
Shadow chancellor George Osborne said it was “extraordinary” that the bonus row had not been resolved earlier and criticised the latest review as another knee-jerk reaction.
“This speaks volumes about how the Government approaches the credit crunch and the whole recession which is hand-to-mouth, chasing headlines...never trying to lead things, see what is coming over the hill and plan for the long-term,” he told the BBC’s Andrew Marr Show.
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