Myners says clampdown on bankers' pay would harm RBS
A PAY clampdown on top earners at Royal Bank of Scotland would risk doing even more damage to the part-nationalised bank, City minister Lord Myners has said.
In evidence to the Scottish Affairs Committee, he compared RBS to a Scottish Premier League club which would be "likely to be playing in a lower division" if run on the budget of a much smaller football team.
"If we want the RBS to compete in a global world ... it has to equip itself appropriately to do that," he said.
He added: "If we said to RBS that you can only pay your key employees up to the national average ... or some other arbitrary figure, the effect would be a significant erosion in the competitiveness of the bank, the loss of its ability to revive credit, a loss of employment – particularly in Scotland – and a decline in the stature of that bank."
His comments come a day after RBS chief executive Stephen Hester said the firm – now 84 per cent owned by the taxpayer after a string of bail-outs – would pay its investment bankers "the minimum we can get away with" in the looming bonus season.
Huge windfall profits among investment banks are in prospect this year, fuelled by state interventions to prop up the system following the financial crisis and reduced competition after the demise of players such as Bear Stearns and Lehman Brothers.
Lord Myners told MPs he personally found pay levels "extraordinary" and the wide disparity in incomes in the banking sector "unpalatable".
But he said that to impose pay restrictions on the bank which would "severely disadvantage" the business in a global market would be "even more unpalatable".
"The Royal Bank of Scotland cannot redefine the world alone," he said.