Vince Cable is expected to be in charge of “business and banks”. Talks are ongoing about exactly what the portfolio will cover. Not sure how they’re going to carve-up responsibility for macro-prudential supervision, lending and the sales of the bank stakes with the Treasury. But the City should brace itself for a much tougher line on pay.
We once dubbed him “Vince the bonus snatcher” on this blog. It seemed fair enough, given the pre-election pledges he made:
1. No cash bonuses: £2,500 is your limit. You’ll have to wait 5 years to redeem them. And Clegg will stop you from using them as security in the meantime.
2. Ban on board level bonuses: bank directors will have to make do with salary and “golf club membership”.
3. No bonuses at loss-making banks: if you’re making millions and but your bank is making a loss, you won’t be allowed a discretionary bonus. A real vote winner at RBS.
4. Tell everyone what you’re paid: publish names of all bankers earning more than £200,000. (Every banker, of course, would then be appalled that he’s earning less than Fred X and ask for a pay rise.)
5. Punish the directors: If the bank breaks guidance on bonuses, the board members are personally fined.
We would not expect the Lib-Con coalition to go anywhere near this far. But there’s bound to be some push to beef up the rules.
Before all the bankers start rushing to book a flight to Geneva, it’s worth pointing out that Cable made clear to us that his “day one” priority was bank lending, not a crackdown on greed. There’s common ground on that with the Tories, particularly on boosting credit to small businesses. The coalition document, when it comes out, should include more detail.
Jim Pickard
Kiran Stacey