* UK's Brown says nobody discriminated against on bonuses
* UK business secretary says RBS should not be singled out
* Goldman Sachs seeks to head off bonus backlash - report
* Barclays to raise fixed salaries, backdate them -source
* RBS shares rise 2.5 pct; Barclays up 3.2 pct
(Adds comment from Fidelity)
By Keith Weir and Paul Hoskins
LONDON, Dec 3 British Prime Minister Gordon
Brown moved to allay fears of a mass walk out by the board of
Royal Bank of Scotland (RBS.L), saying it would not be singled
out for unduly harsh treatment over bonuses.
In a rare move by politicians to calm the global backlash
against big payouts to bankers, Brown said nobody was being
"discriminated against" while his business secretary Peter
Mandelson said he understood the concerns of RBS directors.
Their comments followed a Wall Street Journal report that
Goldman Sachs (GS.N) is meeting investors in an effort to head
off anger over planned bonuses that will put employees on track
to earn an average of $700,000 each this year. [ID:nN0258740]
UK rival Barclays (BARC.L), meanwhile, is to bump up the
fixed salaries of staff in its Barclays Capital investment bank,
an industry source said. The bank will also backdate some of the
Other banks have increased basic salaries as pressure builds
on them to limit their annual bonus awards -- an unintended
consequence of guilelines set by G20 countries, and likely to
add to the debate about fat payouts to bankers after the crisis.
RBS, set to become 84 percent state-owned after its latest
government bailout, warned on Wednesday it could struggle to
hire or retain key staff after the government took control of
bonuses in return for insuring its bad debts. [ID:nGEE5B114J]
Industry sources, who say the bank's board could resign en
masse were the government to veto bonuses, point out directors
have a fiduciary duty to act in the best interests of the whole
company and therefore all its shareholders, big or small.
"People like Standard Life and the Prudential and Fidelity,
I think now need to stand up and speak publicly about their
position on large bonuses and large payments," British Treasury
Minister Paul Myners told Sky television.
But one of that trio said it wants to do so out of the glare
of politics and the media.
"As with all issues related to governance, we believe that
these matters are most productively debated and discussed with
companies, between the parties and not in the full glare of the
public," said a spokesman for Fidelity International.
Analysts warn the government, facing an uphill battle to win
a general election due by June, risks undermining its
investment, and therefore the potential return for taxpayers, if
it bows to public anger and imposes a draconian cap on bonuses.
"No major bank, let alone one with a major capital markets
business, is in a position to compete if it can't pay the market
rate for its staff," said Simon Willis, banks analyst at NCB
Shares in RBS which fell 2 percent on Wednesday following
its warning on bonus caps bounced back on Thursday to trade 2.5
percent higher at 34.40 pence at 1327 GMT. Barclays was up 3.2
percent at 307.2 pence.
The problem faced by the government is that investment
banking, which pays the biggest bonuses, is one of the few areas
where banks are making profits in the current environment.
RBS Chief Executive Stephen Hester warned lawmakers on
Wednesday of the "tension" between short-term political
pressures on the government to clamp down on bonuses and the
longer-term aim of turning around the bank.
But Mandelson said it was important that all banks exercised
restraint on bonuses and that RBS should not be put at a
competitive disadvantage to its rivals.
"I understand the point of view that RBS directors are
expressing. They say they have to remain competitive in the
market in recruiting senior executives and that's why it's
important that all the banks are equally restrained and that RBS
is not singled out," Mandelson told BBC Radio 4. [ID:nLAL004324]
Brown and Mandelson both stressed the importance of a level
playing field when governing bonuses. [ID:nLAL004325]
"These procedures for bonuses are governed by the G20
agreements that we reached with all other countries," Brown told
a news conference. "Nobody is being discriminated against."
But in a sign the furore is unlikely to die down soon Vince
Cable, finance spokesman for the Liberal Democrats which is the
smaller of Britain's two main opposition parties, said Brown
should not be deterred by the risk of resignations at RBS.
"I would accept the resignations and call their bluff and be
very clear that the bank has got to act in the interests of the
public," he told Radio 4.
Meanwhile Myners signalled that the government was not ready
to allow a free-for-all on bonuses.
"The profits of our banks this year reflect very benign
conditions, the consequences of quantitative easing and
government intervention and it's far from clear that that should
lead to wholly fortuitous large bonus payments."
For a column on Barclays' back-dated salary hike stretches
rules, please click on [ID:nGEE5B20U2]
(Additional reporting by Steve Slater, Myles Neligan Kylie
McLellan and Joel Dimmock; Editing by Hans Peters)
((email@example.com; +44 20 7542 5331; Reuters