LONDON, November 3, 2008 (AFP) – Finance minister Alistair Darling announced the creation of a new arms-length body Monday that would manage the British government’s investments in three high street banks bailed out last month.
Speaking to a Treasury department committee hearing earlier, the finance minister also made clear he expected all British banks — not just those taking taxpayers’ money — to exercise restraint in handing out bonuses next year.
“We don’t actually expect many bonuses to be paid at all in the banking sector next year,” he told members of Parliament on the committee.
UK Financial Investments Limited (UKFI), which will be entirely owned by the government, is responsible for ensuring taxpayers get value for the 37 billion pounds (64 billion dollars, 47 billion euros) paid into the banks.
Royal Bank of Scotland, HBOS and Lloyds TSB were bailed out last month after they were hit by the global credit crunch and resulting financial crisis.
The government took shares in return and also imposed conditions on the banks, including that they continue lending to home owners and small businesses. UKFI will ensure the banks keep their obligations.
UKFI will be chaired by Philip Hampton, the