Fat cat bonuses 'won't be paid this year'

14/10/2008

No bonuses are to be given this year to executives at Britain's part-nationalised banks.

Yesterday, the government announced that it would be buying up £20 billion of shares in RBS and a further £17 billion in HBOS/Lloyds TSB.

This is likely to mean that the government takes a 60 per cent stake in RBS and a 40 per cent stake in HBOS/Lloyds, who are expected to complete a merger deal later this year.

However, this public backing comes with strings attached.

Firstly, the banks are obliged to continue their mortgage lending at "2007 levels" - improving the credit supply to consumers.

The government has also suggested that the "bonus culture" in banks, which saw executives sometimes taking home seven-figure sums, would no longer be indulged, the Press Association reports.

Speaking to the BBC today, chancellor of the exchequer Alistair Darling said: "We've already communicated to the two banks concerned that the bonuses will not be paid this year."

News also came yesterday that RBS chief executive Sir Fred Goodwin - known in the City as "Fred the shred" due to his apparent liking for cutting jobs - was to step down from his post.

Tags; Debt Management and Banking, Young Family Finances, Retirement Money Problems, Credit Card Lifestyle, Recent Graduate Debt,

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