Labour politicians wade into RBS bonus row

3rd Dec 2009 16:02

Government ministers are seemingly at odds with each other in the widening row of the size of the bonuses to be paid to Royal Bank of Scotland's investment bank staff.A number of ministers waded into the dispute today after reports that bosses at the state-owned bank could resign if the Treasury starts interfering directly with the £1.5bn bonus pot available to staff at the bank's investment arm.News that chancellor Alistair Darling is ready to veto the huge payout prompted the bank's lawyers to suggest a mass departure at board level could be on the cards.Prime minister Gordon Brown said the bank would not be singled out for unduly harsh treatment over bonuses, adding that nobody was being "discriminated against." The sentiments echoed similarly conciliatory comment from business secretary Lord Mandelson earlier in the day.He expressed support for the board at the Royal Bank of Scotland, adding that he understood "the point of view that RBS directors are expressing. They have to remain competitive in the market in recruiting senior executives." His comments, though, were at odds with harsher views from some of his colleagues. City minister Lord Myners said bankers needed "to come back into the real world" and that it was unrealistic that bankers should expect to be paid million pound bonuses. Harriet Harman, Labour's deputy prime minister, meanwhile, condemned "reckless" and "irresponsible" banks that have been bailed out by the state and still expect to "award themselves massive bonuses". Lord Myners told the BBC that at least 5,000 bankers in the UK will earn more than £1m this year. The reports this morning suggested chancellor Darling won't accept a bonus pool much in excess of last year's £1bn, but RBS is expected to make £6bn from investment banking this year, implying an increase of 50% in bonuses.Directors argue that they'll need to pay more for 2009 if they're to keep the best talent next year and keep generating bigger profits for shareholders and taxpayers.If star traders leave the firm profits could fall and cause a slump in the value of the government's stake.