Bonuses at UK banks 'inappropriate'

20 April 2011

It is inappropriate for banks in the UK to be handing out sizable bonuses to staff while at the same time relying on support from the nation's taxpayers, it has been claimed.

The House of Commons Public Accounts Committee noted lenders have been handed more than £1 trillion of government bailouts guarantees since 2008.

It claimed they are benefitting from an "implicit expectation" that they can always rely on taxpayer money to rescue them - but are currently reaping excessive profits and have put no new mechanisms in place to transfer such risk to bondholders and shareholders.

In a statement, chair of the panel Margaret Hodge said: "It is inappropriate for banks dependent on taxpayer support to be generating excessive incomes, unnecessary bonuses or dividends at the expense of exiting public support."

A recent report carried out by Ernst and Young on behalf of the Institute of International Finance suggested banks in the UK need to move away from a culture of risk and remove their excessive pay structures.

By Gary Cooper

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