Bank bonus cuts of £1bn 'will give small firms £20bn funding'
Posted by Natalie Brandweiner in Finances on Wed, 18/01/2012 - 13:20
Banks paying multi-million pound bonuses to senior staff are depriving small businesses of vital funds, according to a leading member of the Bank of England.
Robert Jenkins, a member of the Bank’s Financial Policy Committee, said small businesses would have greater access to finance if bank bonuses were lower.
During yesterday’s hearing at the Treasury Select Committee, Jenkins told MPs: "Every billion less on bonuses would support £20bn of additional small business lending."
Despite the government’s Project Merlin initiative, many have claimed that small firms are still struggling to secure the vital cash they need. Chairman of the Federation of Small Businesses, John Walker, said it is the smallest of firms that are being refused loans.
Ahead of next month’s bonus season, Bank of England governor Sir Mervyn King warned that banks giving big bonus payouts will jeopardise their reputation.
During yesterday's two-hour hearing he said: "The current squeeze on living standards has been on people who have been in no way responsible for this crisis.
"I think the reputation of those institutions will be affected if their senior executives reward themselves, particularly in a period when their performance has hardly been stellar, with very substantial compensation."
Dragons’ Den judge Deborah Meaden took to Twitter today to say: "I completely agree with Mervyn King Methinks Banks need to think very carefully about their Bonus payments. [sic]"
Business secretary Vince Cable is expected to unveil a full package of boardroom reforms this week.
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