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Mandelson warns RBS on high pay Mandelson warns RBS on high pay
(about 4 hours later)
Lord Mandelson has told the Royal Bank of Scotland that it risks alienating ordinary people if it gave its traders and bosses "exorbitant" bonuses.Lord Mandelson has told the Royal Bank of Scotland that it risks alienating ordinary people if it gave its traders and bosses "exorbitant" bonuses.
The business secretary's comments came after a report in The Times said the firm is to award large bonuses, despite expectations of huge annual losses.The business secretary's comments came after a report in The Times said the firm is to award large bonuses, despite expectations of huge annual losses.
"Please be mindful about how this looks and what public opinion will be," said Mr Mandelson."Please be mindful about how this looks and what public opinion will be," said Mr Mandelson.
The recently bailed-out bank said its pay policy had yet to be decided.The recently bailed-out bank said its pay policy had yet to be decided.
The bank, which is now majority owned by the government, told the BBC: "The board has yet to decide on remuneration policy for the year." The bank told the BBC: "The board has yet to decide on remuneration policy for the year."
It is set to release its annual earnings results on 26 February. "We have previously announced that the Board will receive no bonuses in 2008 and if there are any bonuses for 2009 they will be paid in shares."
"We have previously announced that the Board will receive no bonuses in 2008 and if there are any bonuses for 2009 they will be paid in shares," RBS said in a statement. Record loss expected
RBS, which is set to be 70% owned by the government, is due to release its annual earnings results on 26 February.
It has already said that it expects to report write-downs of between £7bn and £8bn in 2008. The forecast caused shares in the bank to plunge 67%.
The banks have got to be sensitive to public opinion and I think they need to think about what is the best way forward Business Secretary Lord Mandelson See RBS share priceObama unveils executive pay cap
Analysts predict it will report a record annual loss for 2008, beating the £15bn loss posted by Vodafone in 2006.
According to The Times newspaper, RBS paid out £1.83bn in remuneration in 2007, most of which is thought to have been in bonuses.
Speaking at the launch of a £3bn cash injection to boost lending to small businesses, Lord Mandelson said: "Of course you have got to do all you can to recruit the best people and keep the best people in place - there is a huge job on our plates.
"On the other hand the banks have got to be sensitive to public opinion and I think they need to think about what is the best way forward."
US cap
Lord Mandelson's comments come one day after US President Barack Obama announced a $500,000 (£355,000) limit on executive pay at US firms that need fresh government aid.
Wall Street paid $18.4bn (£12.7bn) in bonuses in 2008 and $32.9bn (£22.7bn) in 2007.
BBC business editor Robert Peston said the move in the US will inevitably put pressure on the UK government to introduce a similar cap on British banks that have received state support.