Banks to defy ministers over bonus billions
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Bank chiefs are preparing to defy ministers' pleas for restraint and award billions of pounds in bonuses this year. Although the payouts are expected to be lower than in the previous year, they will still come as an embarrassment to the Government.
Vince Cable, the Business Secretary, has warned the banks they will face "robust action" to ensure lavish bonus payments are curbed. But ministers are now resigned to multi-billion bonuses to senior bankers just as spending cuts hit the country, the BBC reported last night. It said the Royal Bank of Scotland would pay around £1bn in bonuses, compared with £1.3bn the previous year.
Some banks argue the payments are crucial to attract the high-calibre staff to the City of London. But critics say the hand-outs encouraged the risk-taking that brought the financial sector close to collapse in 2008.
Ministers hope to strike a deal with the banks over increasing levels of lending to companies struggling to emerge from the downturn.
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