Banker bonuses to be linked to lending, Vince Cable says

27 July 2010

Bankers could see their bonuses cut if financial institutions do not increase the amount of money they lend to firms, business secretary Vince Cable has warned.

The proposal was included as part of a green paper published by the government, which details its plans to provide funds for the recovery of the private sector.

Dividends and banker bonuses could be impacted as part of a ‘carrot and stick’ method of increasing the amount of lending among financial institutions, the politician has stated.

Vince Cable said: “If we don’t anticipate and tackle finance barriers now we could face a big problem in the future. Left unchallenged, a lack of accessible finance for businesses could prevent the recovery accelerating.

“I’ve heard the problems businesses are facing in getting bank loans up and down the country.”

According to the government, the paper, which was put together by Mr Cable and chancellor of the exchequer George Osborne, discusses what finance options are available for various businesses.

Although the paper talks of the role of government to intervene in failed businesses, it also states that a private sector solution would be a preferable way of dealing with market failures.

By Jim Ottewill

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