8p Mortgage Arrives ; Bailed-Out Banks Facing Curbs on Fat Cat Bonuses [Edition 3]

Article excerpt

FAILING banks were today threatened with pay curbs if they award "exorbitant" bonuses and salaries.

Downing Street made clear that Gordon Brown would be furious if bankers who had been rescued with billions of pounds of taxpayers' money pocketed over-generous rewards.

The issue flared after reports that the Royal Bank of Scotland -- now 68 per cent state-owned after a Pounds 20 billion bail-out -- was planning six-figure bonuses for traders whose deals exposed the bank to trouble. That was denied by the company, which said no decisions had yet been taken.

But Lord Mandelson, the Business Secretary, warned: "The banks have to be sensitive to public opinion." No 10 pointed out that as majority shareholder in RBS, the Treasuryrun UK Financial Investments could refuse to support payments.

"Any proposal would only be supported if it is consistent with the taxpayers' interest," said the Prime Minister's spokesman.

Downing Street also supported US President Barack Obama's plans, announced today, for a $500,000 (Pounds 346,000) cap on the pay of American bank executives forced to seek bailout money from taxpayers.

"We have already set out our views on executive pay and we strongly agree with President Obama that we need a new approach to rewards for senior executives," the spokesman said. The Government's approach went much further than its previous decision to veto bonuses to main RBS board members as a condition of the bail-out.

Senior officials said the Treasury will put strong pressure on all banks seeking help from its latest rescue package to rein in remuneration. …