UK banks should think twice on big bonuses-Osborne

17:40, Thursday 9 December 2010

LONDON, Dec 9 (Reuters) - British banks should pause for thought before unleashing big bonuses this year, finance minister George Osborne said on Thursday.
Banks (SBK.NX - news) have angered UK trade unions and politicians since the financial crisis by continuing to reward staff with large bonuses, even though some of the biggest financial institutions needed substantial government help during the credit crunch.
"My message to the banks is very simple -- reflect upon the economic situation that this country is in. Reflect upon the fact that many different parts of our country are having to accept some difficult decisions," Osborne told reporters at an event in parliament.
"Look (Munich: 867225 - news) around you at the world you live in before you make your decisions on bonuses."
The issue remains contentious and a survey earlier this month showed average basic salaries for investment banking staff in London had risen by 20 percent over the last year, as many firms offset bonus curbs by increasing basic remuneration. [ID:nLDE6B214A]
HSBC (LSE: HSBA.L - news) and Barclays (LSE: BARC.L - news) have told Reuters they need to keep salaries competitive to hold on to top staff. [ID:nLDE6B128W]
The Conservative-Liberal Democrat coalition government is planning a public sector pay freeze and expects hundreds of thousands of state-funded jobs to disappear as it tackles a record budget deficit. (Editing by David Holmes)