Banks face warning over secrecy of bonuses
The leaders of UK high street banks will be told by ministers today to end the secrecy over the lavish pay, perks and bonuses paid to their high-fliers – or face action to force them to open their books.
The banks may in return threaten to move their bases to more favourable tax regimes. The Business Secretary, Vince Cable, yesterday echoed David Cameron's warning that the banks would face extra taxes if they persisted in paying large bonuses.
As the banks near the payment of annual bonuses, Mr Cable called on them yesterday to show "real restraint" this year and warned they would face action if they evaded questions on the payouts.
Mr Cable dismissed the banks' threats to move abroad as "not credible". He and Chancellor George Osborne will also urge bank chiefs at today's meeting to step up levels of lending to companies struggling to emerge from the economic downturn. They believe the banks' reluctance to loosen the purse-strings is hampering recovery.
Mr Cable signalled he was prepared to impose strong disclosure rules to "start shining light" on the salary packages received by senior bankers.
He said: "This myth has somehow been created in parts of the banking community that we are being uniquely severe. We are not – there is much more disclosure in some other Western countries." Mr Cable told BBC1's Andrew Marr Show that there were "various ways" of taxing banks if they failed to act on bonuses, but declined to provide further details. "If they don't behave, if they don't take account of their wider responsibilities, the Government has as a possibility some form of taxation."
Ministers forecast that the total bonus payments will be lower this year than at the end of 2009, but believe the apparent generosity in the midst of austerity will still generate public anger.