Senior executives at Royal Bank of Scotland are under pressure to follow the lead of their chief executive and forgo annual bonuses due to be announced next month.
Yesterday Labour confirmed it intended to press ahead with the planned Opposition Day Debate on bankers' bonuses despite an announcement by Stephen Hester that he would not accept his £963,000 bonus this year.
The Government refused to unconditionally back the RBS board on bonuses. It said that while it was a matter for the bank what bonuses it paid, the Prime Minister urged it to show "restraint".
"I think the main thing that needs to happen is for this bank to be turned round, for its balance sheet to be made safe and for taxpayers' money, vitally, to be recovered," he said.
The Business Secretary, Vince Cable, echoed those comments, calling for other bankers to follow Mr Hester's example and a greater "sense of perspective" in the banking sector.
Ed Miliband is likely to use the debate next week to draw attention to the bonuses about to be announced at Barclays as well as the list of payouts at RBS. His aides believe the threat of the debate and possible censure by Parliament was instrumental in Mr Hester's decision not to take his bonus.
A Labour source said they would use the debate to re-state their support for a tax on bankers' bonuses – which has been resisted by the Government. "This debate is about more than Stephen Hester," the source said. "It is time for the Conservatives and Liberal Democrats to show they are serious about tackling the bonus culture by supporting our plan to repeat the bank bonus tax.
"At a time when everyone else is facing a squeeze on living standards, it is wrong for this Government to choose to cut taxes for the banks."
Downing Street has been hurt by allegations that it was only the Labour threat of a public debate in Parliament which forced Mr Hester to decline his bonus. Foreign Secretary, William Hague, described Mr Hester's decision as "sensible and welcome".
He said the Coalition had already made "big changes" to curb the City bonus culture, but added: "I don't think we should rule out doing more as and when necessary."
Mr Miliband called on the Government to introduce "real change" to the system by taxing bonuses and giving workers a say on top pay in every company. He said: "What we have seen in the last few days is the fact that the Government has dragged its feet, has nodded this bonus through, and I think we have seen that they have got a completely tin ear when it comes to understanding what people are feeling."
Asked whether the Prime Minister was happy to see other RBS executives receive million-pound bonuses, a Downing Street spokeswoman said: "What we are not going to be doing is micro-managing. This Government has taken action to ensure that bonuses are responsible, they are much lower and we are reforming the whole system."
Business leaders condemned politicians for the "vilification" of Mr Hester.
Writing in The Times, Sir Roger Carr, president of the CBI, said the pressure put on Mr Hester would deter others from accepting top jobs that might be open to political interference. "This cannot be in the longer-term public interest," he said.
Payback time: bonuses in the spotlight
Chief executive Stephen Hester waived his £1.4 million long-term share bonus on fears he would become a "pariah" for the banking industry, after chairman Sir Philip Hampton did likewise last week. Investment bank boss John Hourican, who is due a £6m long-term share bonus, is often referred to as the "most senior investment banker you've never heard of". Despite being promoted to the position of chief executive of global banking and markets at Barclays, he has managed to retain an incredibly low profile, while raking in the cash. There are also question marks over the bonus of Bronx-born Ellen Alenamy, the boss of RBS's US Citizens division, who was paid nearly £6m in 2010. She worked at Citibank for 20 years before taking up her current role.
The bank wasn't bailed out by the taxpayer and chief executive Bob Diamond did waive his bonus at the height of the banking crisis. But Mr Diamond is well-known for his high earnings – he earned £6.75m in pay and bonus in 2010, and could receive as much as £3.4m as his bonus for 2011, and a total pay deal of £10m.
Over at HSBC, chief executive Stuart Gulliver could get £4.8m for 2011, after pocketing £6.1m in 2010. Given its much greater exposure to the robust economies of Asia than its immediate competitors, the bank is less exposed to the UK, thus putting it slightly to the side of the public's firing line.
Lloyds Banking Group
Chief executive Antonio Horta-Osorio, already well-known for taking time off due to stress recently, scored a pr coup when he turned down his 2011 annual bonus worth £2.4m before the public momentum against executive pay reached fever pitch. This made him look good and RBS look bad. His predecessor, Eric Daniels, may have to pay back some of his £1.45m bonus from 2010.
Ellen Alenamy RBS (Citizens) CEO
2010 bonus: £6m
This years bonus: unknown
Sir Philip Hampton RBS chairman
2012 bonus: £1.4m: Declined at the weekend
Bob Diamond Barclays chief executive
2012 bonus (expected) £3.4m
Could push pay deal to £10m
Stuart Gulliver HSBC chief executive
2012 bonus: £4.8m
Down from £6.1m last year
Antonio Horta Osorio, Lloyds chief executive
2012 bonus: £2.4m - Declined earlier this month
Eric Daniels, Former Lloyds chief executive
2010 bonus: £1.5m - May have to be returned in part
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