ABI demands urgent overhaul of bankers' bonus pay deals
It can no longer be "business as usual" for banks when they decide how much to pay out in bonuses this year, an influential shareholder group has warned.
In a letter to all UK-listed banks, including Lloyds Banking Group, Barclays, Royal Bank of Scotland and HSBC, the Association of British Insurers (ABI) called for an overhaul of the way the companies determine pay packets.
Plunging share prices have hit investments while the payment protection insurance scandal and eurozone debt crisis have dented bank profits and as a result the ABI expects to see lower bonus pools and individual awards.
Otto Thoresen, ABI's director general, said: "It is essential that all banks take, and are seen to take, a responsible approach."
The mounting pressure comes ahead of next February's banking results season when bankers' bonuses will be revealed and are expected to provoke further outrage, despite being lower than previous years.
Campaigners, MPs and shareholder groups have called for a crackdown on City pay since the 2008 credit crunch forced taxpayers to bail out RBS, Lloyds, Northern Rock and Bradford -amp; Bingley.
Bank of England governor Sir Mervyn King has called on banks to limit pay and dividends to maintain sufficiently high levels of capital to protect from potential future financial shocks, such as the collapse of the euro or a UK credit downgrade.
Mr Thoresen said while each UK bank has different characteristics, ABI members believe there is a need for all banks to "fundamentally restructure their remuneration practices". He said members were concerned about the levels of returns shareholders receive compared to employees. He said an imbalance has seen "too much value being delivered to employees in contrast to the dividends paid to shareholders".