City attacks Osborne over bonuses veto
HIGH-PROFILE City figures including British Bankers’ Association chief executive Angela Knight yesterday hit out at shadow chancellor George Osborne’s suggestion that regulators should strip bankers of their bonuses this year.
The man who most commentators expect to be the next chancellor of the exchequer said yesterday that regulators should axe bonuses in the banking sector because of the support it has received from the taxpayer.
“The regulator should be very, very clear that they will not sign off on pay packages and bonus packages that put money into bankers’ pay instead of money into the bank balance sheets so that they can lend normally into the economy,” he said.
But Knight said that such rhetoric on pay was missing the point about the causes of the financial crisis and how to emerge from it with a healthier financial sector.
“Pay is a peripheral issue. It may be an emotive issue, but that doesn’t mean that it’s the one on which we should be focusing,” she said.
“If the UK goes beyond what other countries are doing on pay, businesses will move out. This is not the time to diminish one of the few world-class industries we have left.”
Knight said the most crucial element of pay reform was to secure international agreement on all aspects of regulatory reform, to avoid putting the UK at a competitive disadvantage.
And she said that the Financial Services Authority’s new code on remuneration was already sufficient to regulate pay structures.
George Magnus, the highly-respected senior economic adviser at UBS, said Osborne’s comments amounted to political grandstanding.
“George Osborne has the luxury of not being in office, so you might have thought he’d have a clear perspective on this. But I’m afraid to say that politicians are just playing to the gallery,” he said.
“There is a genuine issue about dubious practices at banks, but this malarkey about caps on bonuses or controlling compensation at one type of employer is absolute nonsense.”