Osborne calls for a ban on bank bonuses

In a recent speech at Canary Wharf, George Osborne called for a ban on end-of-year cash bonuses at high street banks.

The Shadow Chancellor of the Exchequer said a temporary system should be put in place in which bonuses were converted into shares in the company.

"I am today calling on the Treasury and the Financial Services Authority to combine forces and stop retail banks – in other words the banks that lend directly to businesses and families – paying out profits in significant cash bonuses. Full stop,” he said.

Those with jobs in banking and finance argued that a ban on bonuses would force their firms to leave the UK for more favourable business environments.

David Buik of broking house BGC Partners told the Evening Standard the policy was impractical.

"The idea is supposed to be a vote-winner, but it lacks practicality. It is far too rigid if he wants London to maintain its presence at the top of the financial tree. We need a sensible bonus culture, but not this,” he said. 

City lawyers were also sceptical about the proposed bonus ban. 

“I fear that the consequence of this will simply be that bankers will have their salaries doubled or trebled and that this in itself could increase the risk-taking because the link between performance and profitability will be severed,” Ronnie Fox, of Fox Lawyers, told BBC News.