Banking: Royal Bank of Scotland

Lord Christopher Excerpts

Tuesday 1st February 2011 Lords Chamber

[Lord Sassoon]

My Lords, with regards to the proposed possible settlement with the banks in Project Merlin, discussions are ongoing with the intention of seeing that the banks pay smaller bonuses than they would otherwise; that they are more transparent about their pay; that they make a greater contribution to local communities and the regional economies; that they treat customers fairly; and that they lend, materially and verifiably, more than they were planning to the businesses of Britain—especially small and medium-sized enterprise—so that they can grow and create this year. If we do not get such a settlement, my right honourable friend the Chancellor has made it clear that nothing is off the table. As to the Independent Commission on Banking, it is an independent banking commission and it will do its own thing as it sees fit.

[Lord Christopher]

Will the Minister clarify one of his answers in relation to the amount that will come to the Treasury this year? Will he please explain how—and when—those bonuses that are paid in shares and in a new vehicle entitled “cocos” are taxed?

[Lord Sassoon]

My Lords, the tax rules around deferred compensation are complex and depend on the sort of instrument being paid. Some tax on certain instruments is levied up front and some is levied later, so it depends very much on the circumstances of the individual instrument and the taxpayer. But, of course, some tax might indeed be levied later on.