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.