Banks, bonuses and the Big Five

Labour's two-pronged assault on the banking sector is trying to cement a view in voters' minds that the party is on the side of consumers

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RBS announces mortgage holidays for flood victims

Royal Bank of Scotland will offer three-month mortgage repayment breaks to customers with flooded homes.

Full details, including how to apply for the scheme will be released tomorrow by the group, which includes NatWest.

Flooded home-owners will be able to get a three-month mortgage holiday, say RBS.
Flooded home-owners will be able to get a three-month mortgage holiday, say RBS.

It said it would also send specialist business support teams to affected areas in coming weeks to help small businesses with short-term financial problems as they carry out repairs and suffer lost trading income.

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RBS CEO: Problems from the crisis are still emerging

The chief executive of the Royal Bank of Scotland has said some of the problems and bad decisions from the peak of the financial crisis are only just emerging, following the news the bank is setting aside further capital to cover litigation and customer compensation claims.

Royal Bank of Scotland in the City of London
Royal Bank of Scotland in the City of London Credit: Johnny Green/PA Wire

The bank's CEO, Ross McEwan said RBS was the "biggest bank in the world at peak of the financial crisis" and the "scale of the bad decisions during that period means that some problems are still just emerging."

McEwan said the bank is stronger now and can manage the costs while still supporting customers.

The bank also confirmed its executive committee would not receive bonuses for their performance in 2013. McEwan has already said he will waive his bonus for 2013 and 2014.

Read: RBS to set aside £3 billion for customer claims

RBS to set aside £3 billion for customer claims

The Royal Bank of Scotland is to set aside more than £3 billion in additional funds to cover litigation and customer compensation claims.

RBS headquarters in Edinburgh
RBS headquarters in Edinburgh Credit: David Cheskin/PA Wire

The state backed lender said the sum included £465 million to cover a redress scheme for customers mis-sold payment protection insurance (PPI).

The group has also set aside £1.9 billion to cover mainly US action over mortgage-backed financial products and an extra £500 million in relation to allegations over the mis-selling of complex financial products, known as interest rate swaps, to small firms.

There will also be an additional £200 million of provisions "for various conduct related and legal expenses" when fourth quarter results are published next month, said the bank, which is 80% taxpayer owned.

Cable urges RBS to 'show restraint' on bonuses

Business Secretary Vince Cable would not be drawn on whether the government should reject any attempt by RBS to exceed the EU bonus cap but urged the bank to "show restraint", during an interview with ITV News.

Read: BoE Governor says UK a 'hard touch' on bankers' pay

He told Deputy Political Editor Chris Ship that the bank, which is 81% owned by the taxpayer, had not so far come forward with any propositions on bankers' bonuses.

Under EU laws, a bonus awarded to a banker that is over double their annual salary has to be approved by shareholders.

As Chancellor, Mr Osborne is effectively the bank's main shareholder.

Read: Banks, bonuses and the Big Five

BoE Governor: UK a 'hard touch' on bankers' pay

Bank of England Governor Mark Carney said the UK already had a "hard touch" regime in relation to bankers' pay and criticised the EU cap on bonuses.

Mr Carney said the cap would partly reverse the changes that have been made to be able to recover bonuses from bankers.

It takes back some of the advantages of the approach that we have had because it will incentivise more cash compensation today - exactly the type of problem we had before - that we can't claw back.

We would rather see more deferral, more equity [share-based payout] and this ability to take it back when those risks come to light.

– Mark Carney, Bank of England Governor

He also denied the suggestion that regulators had "dropped the ball" over bankers' pay.

Read: Banks, bonuses and the Big Five

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MPs reject Labour motion to cap RBS bonuses

ITV News Deputy Political Editor Chris Ship has tweeted:

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MPs reject Labour motion to cap bonuses at RBS at 100% of salary. Maybe they were listening to BoE Governor who also thought it was bad idea

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241 MPs backed the Labour motion on bonuses. 304 against

Carney 'agrees' bonus cap is not right way to control pay

Bank of England Governor Mark Carney said that he "absolutely" agreed with the Parliamentary Commission's comments on the EU bonus cap that concluded: "We're not convinced that a crude bonus cap is the right instrument for controlling pay."

He also said that he had "no reason to disagree" with comments from the Independent Commission on Banking (ICB) that capping market share and balance sheet size "would not result in substantial improvements to competition in retail banking in the UK."

Read: Banks, bonuses and the Big Five

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