The directors of the agency set up to manage the Government's stakes in Britain's part-nationalised banks have agreed to take a 5 per cent pay cut as public-sector spending is slashed.
Sir David Cooksey, the chairman of UK Financial Investments (UKFI), said it was focusing hard on cutting its costs, which would be "substantially below" the targets in its business plan.
"In this regard, all members of the board have volunteered to take a 5 per cent reduction in remuneration in response to the Government's commitment to cutting the cost of the public sector," he added.
Lower wages are being paid to all seven members of the board from this month. The total salary, pension and social security contributions for the board and staff of UKFI totalled £1.9m in the year to the end of March, its annual report revealed yesterday.
The body said its performance- related bonuses for staff – which are not offered to non-executive directors – were a fraction rather than a multiple of people's salaries, and were deferred for three years. A total of £198,000 was awarded in the year to the end of November 2009. The chief executive, Robert Budenberg, has declined to participate in the scheme, the annual report said.
UKFI was set up in 2008 to manage the holdings taken by the state in Lloyds Banking Group and Royal Bank of Scotland. It currently holds 83 per cent of the shares in RBS and 41 per cent of those in Lloyds. The body also manages the lender Northern Rock and the nationalised parts of Bradford & Bingley.
Mr Budenberg, who joined UKFI in January after John Kingman left to take up a job at Rothschild, said the key mission for its market investments arm was to develop a disposal strategy for the bank shares. There was no predetermined timetable to sell these holdings, he added, "given the need to respond to financial conditions".