Retail banks should be prevented from paying out “significant” cash bonuses, according to the Conservatives.
Shadow chancellor George Osborne will today call on the Treasury to adopt emergency measures to force high-street banks to stop Christmas cash bonuses and instead offer shares which cannot be cashed in for three years.
In a speech today he will say: “We need this emergency plan to stop cash going this Christmas into the bank accounts of bankers and instead get that cash into the rest of the economy.
“It is time for the government to act – and act decisively. We cannot wait for the promised land of a new responsible bonus culture which looks more remote than ever.
“Where banks do want to pay bonuses this year to those senior staff who have earned them, those bonuses should take the form of new equity capital – shares in the business. This equity capital will also strengthen the balance sheet and support lending.”
But the Telegraph reported Osborne is expected to stop short of saying bonuses should be halted altogether.
Directors salaries rise
Meanwhile a survey by the Incomes Data Services found overall bonuses had dropped in size by nearly a third, but directors’ salaries had increased significantly to compensate.
Bonuses for chief executives at FTSE 100 companies fell by 29% in the past year, the sharpest drop in a 12-month period for 10 years, while the average salary rise for the head of a FTSE 100 company was 7.4%.
The largest salary increases were in the construction sector, where they increased by 12.8%.
Three directors of Hargreaves Lansdown, the financial service provider, saw their salaries increase by between 100% and 147% last year.