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Banking giants in talks to slash bonus pot

Britain's biggest banks were said today to be in talks about reducing the multi-billion pound staff bonus pot.

Negotiations about cuts to around £7 billion of payouts already earmarked for the New Year were being steered by the British Bankers Association, the BBC reported.

One participant told the broadcaster that public anger about the size of the bonus pool could see it slashed to £4 billion.

News of the talks follows warnings from both Business Secretary Vince Cable and Deputy Prime Minister Nick Clegg about banks paying big bonuses given the state of the economy.

Institutions could face more taxes if they pay out "outrageously large" sums, Mr Cable said, while Mr Clegg warned ministers would not stand "idly by" if they handed out huge rewards after being bailed out by the taxpayer.

The outgoing head of business group the CBI also said bankers would seem "arrogant and out of touch" if they carried on paying bonuses while the public sector wrestled with swingeing cuts.

A new levy on banks' balance sheets is due to come into force at the start of next year. Ministers hope it will raise more than £8 billion over the next four years.

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