Nick Clegg warns banks on 'unjustified' bonuses

Deputy Prime Minister Nick Clegg delivered a stark warning to banks today that the Government is ready to take action against them if they pay out "unjustified" bonuses.

He insisted ministers would not stand "idly by" if they handed out huge rewards after being bailed out by the taxpayer.

He told BBC Radio 4's Today programme: "Clearly, if the banks pay themselves unjustified bonuses, we reserve the right to take very serious action on that."

Asked if that was a warning, he replied: "Of course it is. I think it would be not in their interests at all, socially or economically, for them to be starting to award themselves (big bonuses)."

Mr Clegg went on: "I think it is very important that the banks understand that you cannot possibly award yourself ludicrous sky-high bonuses in an industry that has been bailed out by the taxpayer when those same taxpayers are now having to make very serious sacrifices in their own lives...

"If you abuse the generosity of taxpayers who have provided, both directly and indirectly, a massive infusion of public funds to bail you out by awarding yourselves bonuses that will appear almost gratuitously offensive at a time when people are having sacrifices in terms of their pay and pensions, then clearly this Government will not be able to stand idly by."

The Liberal Democrat leader said he was not ruling out any options against banks, including a further levy.

The intervention came after Business Secretary Vince Cable warned bankers they were heading for a "train crash" if they award themselves huge bonuses.

He predicted an "enormous kick-back" from some of his colleagues, who would be on the "war path" over the level of bankers' pay and bonuses if the issues flares in the coming months.