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Lib-Dems demand end to bonuses for bank directors
Nicholas Cecil and Anne McElvoy16 Sep 2009
The most senior bankers in the City should not receive bonuses, Nick Clegg said today.
The Liberal Democrat leader called for regulations to create a “firewall” between bank directors and the bonus culture which has been blamed for fuelling excessively risky deals.
In a wide-ranging interview with the Standard, he also held open the door to a coalition with
Labour or the Tories under a hung Parliament.
Making clear that he would want Lib-Dem “changes” as part of any “composite governing
arrangements”, he said voting reform was even more important after the MPs' expenses scandal — as many of the politicians with dodgy claims were in safe seats.
Mr Clegg did not name any financiers whom he believes took reckless gambles. But his
proposal is likely to anger many senior figures in the Square Mile as it would be a blanket ban
applying to all bank directors.
It would mean scrapping bonuses for individuals such as Bob Diamond, head of Barclays Capital, Stephen Hester, chief executive of the Royal Bank of Scotland and Eric Daniels, the boss of Lloyds Banking Group.
Mr Clegg said: “People at board level, director level, by all means pay them an enormous amount of money, if that's what the market demands, give them perks, give them free membership
of a golf club, give them swanky chauffeur-driven cars.
“But don't give them incentives to distort and warp the business strategy that they set the rest of the business.”
Mr Clegg said there would need to be international agreement on such changes otherwise any steps taken unilaterally in Britain
would risk damaging the City.
Ahead of his party's annual rally in Bournemouth next week, the Lib-Dem leader appeared more
positive on a coalition if no party wins an overall majority at the next election.
He said he would not be seeking a deal under which the Lib-Dems would be offered a few seats in Cabinet to “join” a Conservative or Labour administration.
But he said: “If no party has an absolute majority... will I look for opportunities to push
through the changes I believe in? Yes, I will. But certainly not at any cost or as an annexe to
another party.”
On Afghanistan, he said Britain and America should know within months whether a new strategy, based on a report by US military chief General Stanley McChrystal, could be successful and if not a decision needed to be taken on whether to pull out UK forces.
Mr Clegg moved the Lib-Dems away from being a tax-cutting party and said lower public spending, such as a freeze or squeeze on pay, would be needed to balance Britain's books.
Reader views (5)
So,how do we fix the British economy?
I believe that we need to implement both short & long term measures to get ourselves out of our current financial climate of shameless greed & arrogance, openly perpetrated by reckless bankers.
So, short term, increase taxation to punitive levels on all bank earnings,salary,bonuses and other financial perks,on a National Emergency basis, for a period of the next 12 months, to be reviewed thereafter.
Split current banking organisations into banking for society (business,personal,investments,loans, etc) and banking for the high risk operations that have lead to the current world-wide financial disasters.
The banking for society being guaranteed by legitimate shareholders and investors,who share in that success- backed by government initially and the latter to be 100% financed by the incumbents of such speculative operations.
Finally, as to the banker's warnings about such actions eroding London's status as a financial centre,let them move elsewhere and find out what reception they would get,for themselves!
All we need, is a tough government stance now- and we would soon see a rapid change in our economic climate.
Such action would have the large majority of our society totally behind such action.
- Mike, Eastbourne, United Kingdom., 21/10/2009 16:14
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I'm curious as to where exactly the Lib dems get their policy ideas from? I can only assume they have scrabble boards set up to create them, such is the sheer randomness and inherant stupidity of their policies.
- Bob, Cheam, 21/10/2009 15:14
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ridiculous idea.
as a public company shareholders demand good returns on their investments. If there is no connection between Directors remuneration and shareholder value what method can be used.
by way of an example, as a shareholder of RBS (as we all are) if Hestor achieves the goals set, we will have made a profit on the money we put into to support them, surely that's a good thing..
- Martin_Clerkenwell, london, 21/10/2009 15:14
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The Lib Dems are the only party with any common sense and honesty.Its time we the British public get rid of the rich parties that have to answer to their backers and vote for a party that are for the majority of the people of this country.
- David, london, 21/10/2009 15:14
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Well I have to agree with Mr.Clegg. Directors are very well paid already and their remit is to direct the company strategically. Bonuses come from outperforming short-term tactical goals. Senior staff take no direct risks, but share in the rewards making them less likely to reign in employees pushing the limits. That's exactly what happened with sub-prime.
- Mark, London, 21/10/2009 15:14
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