Bank bosses urged to slash their pay and axe dividends amid mounting fears lenders are ripping off desperate borrowers
- Lenders charging small businesses interest rates of up to 12% on loans
- This is despite the fact the Bank of England has slashed interest rates to 0.1%
Banks are coming under pressure to cut their bosses’ multimillion-pound pay packages and dividends amid claims they are ripping off desperate borrowers.
The Mail revealed earlier this week that High Street lenders were charging small businesses interest rates of up to 12 per cent on any loans taken out under the Coronavirus Business Interruption Loan Scheme.
This is despite the fact that the Bank of England has slashed base interest rates to just 0.1 per cent, and the Government is covering 80 per cent of the losses on any bad loans to protect the banks and encourage them to lend.
Pay row: Barclays’ boss Jes Staley (pictured with his wife Debbie,) took home £5.9m last year, Lloyds’ Antonio Horta Osorio received £4.7m, RBS’s Alison Rose bagged £1.4m
Now banks are being urged to cut executive pay and put the money to good use. They are also under pressure to scrap dividend payments to shore up their finances.
Conservative MP Kevin Hollinrake, chairman of the all-party parliamentary committee on fair banking, said: ‘Cutting bonuses would be the right thing to do.
There’s a strong feeling that we’re heading into another crisis. ‘Unlike the last one, this isn’t caused by the banks, but people are still reflecting on the 2008 crisis and all the bank bailouts in terms of whether they were fair.
‘Taking pay cuts and putting that money to work to help people would be a very good gesture.
‘A lot of people around the country are taking cuts to their salary, and to see banking bosses do the same would be well received by the City and the public.’
Earlier this week, board members at Banco Santander, the parent company of Santander UK, agreed to donate up to half of their salaries to a coronavirus aid fund.
Group chief executive Jose Antonio Alvarez and chairman Ana Botin will donate 50 per cent of their entire pay package to the fund, while non-executive directors will give up 20 per cent.
In the money: Lloyds’ Antonio Horta Osorio received £4.7million last year
Last year Botin was awarded £3.8million, while Alvarez bagged £2.8million. Santander’s country heads – such as UK chief executive Nathan Bostock, who earned £4.3million last year – will be charged with implementing similar measures themselves.
But the UK’s big four banks – Barclays, HSBC, Lloyds and RBS – have so far declined to comment on whether they will consider doing the same.
Barclays’ boss Jes Staley took home £5.9million last year, Lloyds’ Antonio Horta Osorio received £4.7million, RBS’s Alison Rose bagged £1.4million for her first two months in the job and HSBC’s then-interim boss Noel Quinn pocketed £2million during his first five months.
Luke Hildyard, director of the High Pay Centre, said: ‘Banks are in a position to help struggling households and businesses throughout the crisis period.
That would seem a better use of their money than lavishing millions of pounds on already wealthy bankers.’
Banks are already thought to be reviewing their forthcoming dividend payments, worth more than £7.5billion.
Barclays is the first in line, due to pay its £1billion dividend on April 3. Banks are already under fire for hiking overdraft fees to as much as 50 per cent from April 6, despite the cost of borrowing having fallen to a record low.
Barclays and Metro Bank this week bowed to the pressure and announced they will waive their charges to provide support to customers at ‘this challenging time’.
Barclays will suspend its charges until the end of April, while Metro will waive them until the end of June. But their rivals are yet to announce any similar relief for struggling households.