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UK Politics

Johnson attacks 'bewildering' bonus for RBS chief


London Mayor Boris Johnson joined condemnation of the near-£1 million bonus for RBS boss Stephen Hester, saying he was "at a loss to justify" the scale of the payment.

Mr Johnson said the award to the chief executive of the bailed-out institution was "absolutely bewildering" and should have been blocked by ministers.

RBS should be run "on public sector lines", he added, saying he found the idea that the Government could not control it "far-fetched".

Speaking from the World Economic Forum summit in Davos, Switzerland, he told the BBC he had sympathy for Mr Hester and wanted an end to "incessant banker bashing".

But he went on: "I find it absolutely bewildering because RBS occupies the same status in the economy as Gosbank did in the Soviet Union: it's a state-owned bank.

"The idea that this is not in the control of the Government seems to me to be far-fetched. Stephen Hester is an able man probably doing a difficult job and his contract must have been drawn up, I guess, when he was appointed in 2008 under Alistair Darling and Gordon Brown.

"I do not know what they were thinking of when they drew it up that way, but it certainly seems to me to be right that the Government should step in and sort it out.

"People will not understand how somebody can get a whacking great bonus like that when they are basically running a state-owned concern, and I am at a loss to justify it."

He said: "If you are going to have effectively a state-owned institution then there should be a concept of public service and there should be a concept of duty to the wider British public in the form of taxpayers who, after all, stepped in to bail out that bank.

"I have sympathy with Mr Hester in the sense that the terms of his contract will have been drawn up, he will feel that he has done a very hard job well. But this is not a normal bank. This is not a free-booting, private sector, risk-taking enterprise, this is a state-owned concern that taxpayers have had to step in and bail out."

Asked what he would have done as prime minister, he said: "I think a state-owned bank should be run on public sector lines."

Meanwhile Labour leader Ed Miliband accused David Cameron of a "disgraceful failure of leadership" over the bonus.

Mr Miliband said the Prime Minister had failed to live up to his rhetoric on executive pay and shareholder activism.

"It's a disgraceful failure of leadership by the Prime Minister," he said.

"He's been promising for months action against excessive bonuses, executive pay, and now he's nodded through a million-pound bonus.

"He's also been lecturing shareholders about how they need to be more active in holding executives to account.

"He owns, through the British Government, 83% of the Royal Bank of Scotland.

"He must now explain, not least to the British people, why he has allowed this to happen."


* RBS settles chief's bonus: not £1m – but not far off