Please turn on JavaScript. Media requires JavaScript to play. A government minister has told bankers "to come back into the real world" after Royal Bank of Scotland directors threatened to resign over bonuses. City Minister Lord Myners said it was unrealistic that bankers should expect to be paid million pound bonuses. RBS reportedly wants to pay a total of £1.5bn in bonuses to investment banking staff, and the board has threatened to quit if the government blocks the move. The Treasury said it would intervene if it was in the interest of taxpayers. Meanwhile, Barclays is planning on increasing the non-variable element of staff pay at Barclays Capital, its investment bank, the BBC's business editor Robert Peston says. ANALYSIS By Hugh Pym, Chief economics correspondent The Government is caught between a rock and a hard place. Many voters cannot understand why taxpayer supported banks should pay their staff any extra bonuses.

In January the Chancellor will have to approve the bonus pot at RBS. Any increase could generate a backlash against the government.

But the City doesn't like what's seen as interference in the boardroom. Looks like this will run and run. Barclays maintains that by pushing up salaries, it is only doing what G20 governments have asked it to do, by shifting the weight of pay from the variable portion - ie bonuses - to fixed. Legal duty Lord Myners has estimated that at least 5,000 bankers in the UK will earn more than £1m this year. He told the BBC that the median wage in the UK was just over £20,000 a year, and yet some bankers expected as a matter of course to receive bonuses, in addition to their salaries, of millions of pounds. He also said banks needed to be mindful of the fact that much of the profit they were now making was due to "the benign conditions" created by the government pumping billions of pounds into the economy to stimulate demand. RBS directors say it is their legal duty to act in the interests of shareholders, and that if they do not pay competitive bonuses, top talent will leave the bank. This would have an adverse impact on profitability, and therefore the bank's ability to repay the taxpayer, they argue. 'Pushed around' Business Secretary Lord Mandelson said: "I understand the point that RBS directors are expressing - they say they have to remain competitive in the market in recruiting senior executives, and this is why it's important that all the banks are equally restrained, and RBS is not singled out." Royal Bank's directors may well be sending their oppos at Barclays some super-duper Christmas hampers

Robert Peston, BBC business editor

Read Robert Peston's blog Send us your comments The Conservatives said the government was sending out mixed messages. Shadow financial secretary Mark Hoban said: "The government's policy on bonuses is a muddle. The city minister claims he will veto big bonuses only to be superseded by the business secretary calling for banks merely to show restraint. "We have been clear - no significant cash bonuses should be paid out this year and that money should go towards increasing lending to the families and businesses who propped up the banks in the first place." Liberal Democrat Treasury spokesman Vince Cable said the government should "call the bluff" of the RBS directors and accept their resignations. "The government has to impose itself and must not be pushed around," he told the BBC. One banking analyst went a step further, suggesting the directors should be sacked. FROM THE TODAY PROGRAMME Please turn on JavaScript. Media requires JavaScript to play.

More from Today programme "Their job is very simple - to fulfil the requirements of the shareholders. If we tell them to paint everything blue, everything has to be blue," said Ralph Silva at SRN. "They should not be going up against shareholders. I think we should fire them [before they resign]." But he also argued that the government would be making a mistake if it told the bank not to pay bonuses. The best bankers who brought in the most profit would leave, he said, and for this reason he thought the bonuses would be paid. Big profits But others took a more sympathetic line with the RBS directors. Stephen Regan at the Cranfield School of Management said that shareholders could not call the shots and only had the power to call an extraordinary general meeting, at which they could vote on whether to oust the board. "Ownership is with the shareholders, but control of the business is with the directors," he said. The government owns 70% of RBS after bailing out the bank during the height of the financial crisis, a stake that is set to rise to 84% following the Treasury's recent pledge to inject billions more into the bank. Last month, Chancellor Alistair Darling announced that the Treasury, as the major shareholder in the bank, would have the "right to consent" to how much RBS pays in bonuses and how they are paid. RBS is said to want to pay £2bn in bonuses across the group for its performance in 2009, with £1.5bn going to its investment banking division, which is expected to make £6bn in profits this year.



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