British government vetoes RBS bank plan for higher bonuses

Shareholders of state-rescued Royal Bank of Scotland will not get to vote on allowing its bankers to earn an EU bonus cap of twice their salary, the government said Friday. UKFI, the body that manages the government's 81-percent stake in the lender, will not support the proposal and therefore a planned vote on the issue will no longer take place at the bank's annual general meeting in June, RBS said in a statement. Separately, the Treasury said that "an increase to the bonus cap cannot be justified and the government made clear it would not have supported such a proposal" in light of the bank's ongoing struggles. In any case, Britain opposes any form of bonus cap at the country's banks, arguing that it creates an uncompetitive financial sector.   In the wake of the financial crisis, the European Parliament last year agreed to cap bonuses for bankers at the same amount as is paid in a fixed annual salary, or twice that sum if shareholders approve. Britain is challenging the law at the European Court of Justice. "The European bonus cap is not a well-thought out idea and will not support stronger and safer banks, which is why the government is challenging it in the European Court. But while it exists, we will make sure it is applied fairly," a Treasury spokesperson said in a statement on Friday. "Under the new strategy set out by RBS chief executive Ross McEwan, RBS is heading in the right direction, but it has not yet completed its restructuring and remains a majority publicly-owned bank." Royal Bank of Scotland's losses soared to almost £9 billion last year, while its decision to pay millions in bonuses triggered a political backlash.