Calls for bank chiefs to repay bonuses

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LONDON - As the financial crisis worsens, pressure from members of parliament, consumer groups and shareholders is mounting for directors of high street banks to repay performance-related bonuses worth an estimated £143 million in the period since 2003.

One union leader has suggested the government use its controlling stakes in two high street banks to use legal action to recover the money.

Speaking in the Evening Standard newspaper, Paul Kenny, general secretary of the GMB union, said: "The Government should use its various controlling stakes in the banks to commence legal action to get repayment of these bonuses, which were paid under false pretences." The London newspaper has also printed a list of the biggest "fat cat" offenders, which includes banking chiefs from Barclays, RBS and several other high street banks.

Vince Cable, spokesman for the Liberal Democrat Treasury said: "As a basic moral and philosophical position it has to be right that the bonuses are refunded. Whether it can be enforced practically is another matter."

UBS has recently introduced the concept of a negative bonus to retrieve bonus payments from underachievers, but there are few other precedents for the repayment of bonuses. Government involvement in setting compensation levels is a highly controversial issue, but one that will continue to be debated as the financial crisis deepens. Look out for a forthcoming feature on this issue in February's OpRisk & Compliance.