The Government has no plans to nationalise the banking sector as Lloyds gives out 80 million pounds in cash bonuses.
by Jessica Summers
Lord Mandelson’s comments come two days after the government increased its stake in Lloyd Banking Group to 65 percent from 43 percent.
Speaking on the BBC's Andrew Marr show, the business secretary said nationalisation would be neither “necessary nor desirable".
Lord Mandelson admitted banking regulation should have been stronger, and change was now needed globally.
Ruling out full nationalisation, such as happened at Northern Rock, he said the majority ownership model at Lloyds and RBS enabled the government to "exercise a great deal of influence... without taking that final step of removing the shareholders.
He said matters to address this would now be discussed at next month's meeting of G20 global leaders, which will take place in London.
STAFF BONUSES
However, staff at the majority taxpayer-owned Lloyds Banking Group are today finding out who will receive cash bonuses totalling 80 million pounds.
Lloyds has insisted that executive directors will forgo their bonuses, and other senior staff will have theirs deferred until at least 2010.
Those eligible for bonuses, most of them working in branches, will be given an average 1000 pound bonus in cash which has been approved by UK Financial Investments, which manages the government's stake in financial institutions.
Other industry sectors are reporting severe drops in bonuses whereas bankers’ bonuses seem to remain guaranteed. Opposing politicians surely will have something to say about Lloyd’s recent bonus announcement, especially as government shares increased 23 percent only days ago. There are even reports that the government’s 63 percent stake in Lloyds could rise to 77 percent for underwriting 260 million pounds of the bank's toxic assets.
Unions have insisted that staff of the former Lloyds TSB deserve their bonuses as that side of the group remained in profit. Can the taxpayer possibly agree with payouts after all the controversy surrounding bankers’ bonuses?
It seems despite the government’s plea to stop rewarding failure; those in the arguably failing banking sector are still being rewarded.