Britain’s retail banks should be banned from paying out “significant” cash bonuses as part of a drive to plough profits back into new lending, the shadow chancellor, George Osborne, will declare tomorrow.

In the strongest attack by the Tories on banks, Osborne will say that bonuses should be paid in shares, which cannot be cashed in for at least three years, as he warns that billions of pounds in “subsidised profits” are threatening to worsen the credit crunch.

In a speech to Thomson Reuters in Canary Wharf, east London, Osborne will tell financiers: “We cannot wait for the promised land of a new responsible bonus culture which looks more remote than ever. We need to take emergency steps to support bank lending and move the economy forward.

“I am today calling on the Treasury and the Financial Services Authority to combine forces and stop retail banks paying out profits in significant cash bonuses. Full stop. Then the cash that would have been paid out should be put on to banks’ balance sheets explicitly to support new lending. This should be a condition of continuing to receive taxpayer guarantees and liquidity support.”

…more at The Guardian

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