Banks to proceed with bonus bonanza

(SHARECAST) – City bankers will still pocket billions of pounds in bonuses as bank bosses largely reject pleas from ministers to slash payouts.

The total figure may be less than it would have been if the government had not put pressure on the banks, according to the BBC. Quite how much of an impact is unclear, but investment banking had a tough 2010, so bonuses would probably not have been as high as in 2009 anyway. State-owned Royal Bank of Scotland is thought to be preparing payments of nearer £1bn, down on last year’s £1.3bn.

Coalition leaders are still likely to be embarrassed by the level of payouts though, just as their tough package of spending cuts – including thousands of public sector job losses – begin to bite.

Business secretary Vince Cable has already warned the banks that “robust action” will be taken if the City fails to curb its excesses.

Banks argue that they risk losing top staff if they cut bonuses. As a concession, they may commit to an increase in lending to small businesses, helping the UK’s economic recovery.