Bonus ban for board members at bailed-out banks

Chancellor Alistair Darling has banned senior board members at the banks bailed out this morning from receiving bonuses this year.

And future bonus structures must be linked to long-term success rather than short-term risk-taking, he insisted.

The government announced a £37bn cash injection that will see taxpayers take a 60% stake in RBS and own 40% of the merged Lloyds TSB and HBOS bank.

The Treasury said that the recapitalisation scheme relied on banks agreeing to a range of commitments, including bonus structures and director appointments.

“In 2008, the government expects no cash bonuses to be paid to board members,” it said in a statement.

“For remuneration policy going forward, incentive schemes will be reviewed and linked to long-term value creation, taking account of risk and restricting the potential for rewards for failure.”

The government also reserved the right to agree with boards the appointment of independent non-executive directors.

Senior figures at the bailed-out banks left their posts. RBS chief executive Fred Goodwin quit, while its chairman, Tom McKillop, is to retire. HBOS chief executive Andy Hornby and chairman Lord Dennis Stevenson are also to stand down.

Darling said in a press briefing that it would be “nonsense” for executives at the bailed-out banks to receive bonuses this year.

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