Today the FT has splashed on the deputy prime minister warning bankers to show restraint during bonus season for risk of a public backlash. The government would not stand idly by if this failed to occur, Nick Clegg warned.
As George Parker reports:
“The deputy prime minister has watched in dismay as attempts by the banks to co-ordinate their action on cutting bonuses and boosting lending have faltered in recent days.”
“They don’t operate in a social vacuum,” he told the Financial Times. “It is wholly untenable to have millions of people making sacrifices in their living standards, only to see the banks getting away scot-free.”
The comments should win the Lib Dem leader kudos among left-wingers alienated by public sector cuts and the rise in tuition fees. But to what extent does Clegg want the banks to rein in their bonuses in February and March? Does he want them to be slightly lower than last year – or a tiny fraction of that figure?
Unfortunately he doesn’t say. I’m told by his aides that he doesn’t want to put up an “arbitrary figure” because the point of principle is clear.
Yet readers of the financial press may already be aware that bankers are glumly predicting a less than record-breaking bonus season for various reasons, especially in investment banking.
A recent survey by Financial News showed that headhunters were expecting a drop in bonuses in that sector of as much as 40 per cent compared to a year ago.
If this is what transpires, what will Mr Clegg’s reaction be? Will he take the credit for this sizeable reduction in payout? Or will he insist that the banks should have shown even more restraint? It’s really not clear yet.
Jim Pickard
Kiran Stacey