UKFI "walking tightrope" on bank bonuses

The body holding stakes in Royal Bank of Scotland and Lloyds said it was "walking a tightrope" in attempting to limit bonus payouts at the banks while trying to stop talented staff leaving. Skip related content

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"We have to walk this tightrope in which we reform the cultures ... but we cannot afford to be in a position where the banks lose so many people that we start to lose serious value," John Kingman, chief executive of UK Financial Investments, told lawmakers on Wednesday.

Kingman said no decision had been made on the amount that RBS will pay in bonuses for 2009, but the bank had agreed widespread reform of the structure of payouts.

Kingman said he expects to see a positive return on UKFI's holding in the banks over time and for there to be "healthy interest" in assets to be sold by RBS, Lloyds and state-owned Northern Rock.

UKFI, set up last December, will hold 84 percent of RBS after another rescue deal on Tuesday. It has 43 percent of Lloyds, owns Bradford & Bingley's loan book and will own Northern Rock from the end of this year.

(Reporting by Clara Ferreira-Marques and Steve Slater; editing by Elaine Hardcastle)