Lib-Dems demand end to bonuses for bank directors

The most senior bankers in the City should not receive bonuses, Nick Clegg said today.

The Liberal Democrat leader called for regulations to create a "firewall" between bank directors and the bonus culture which has been blamed for fuelling excessively risky deals.

In a wide-ranging interview with the Standard, he also held open the door to a coalition with
Labour or the Tories under a hung Parliament.

Making clear that he would want Lib-Dem "changes" as part of any "composite governing
arrangements", he said voting reform was even more important after the MPs' expenses scandal — as many of the politicians with dodgy claims were in safe seats.

Mr Clegg did not name any financiers whom he believes took reckless gambles. But his
proposal is likely to anger many senior figures in the Square Mile as it would be a blanket ban
applying to all bank directors.

It would mean scrapping bonuses for individuals such as Bob Diamond, head of Barclays Capital, Stephen Hester, chief executive of the Royal Bank of Scotland and Eric Daniels, the boss of Lloyds Banking Group.

Mr Clegg said: "People at board level, director level, by all means pay them an enormous amount of money, if that's what the market demands, give them perks, give them free membership
of a golf club, give them swanky chauffeur-driven cars.

"But don't give them incentives to distort and warp the business strategy that they set the rest of the business."

Mr Clegg said there would need to be international agreement on such changes otherwise any steps taken unilaterally in Britain
would risk damaging the City.

Ahead of his party's annual rally in Bournemouth next week, the Lib-Dem leader appeared more
positive on a coalition if no party wins an overall majority at the next election.

He said he would not be seeking a deal under which the Lib-Dems would be offered a few seats in Cabinet to "join" a Conservative or Labour administration.

But he said: "If no party has an absolute majority... will I look for opportunities to push
through the changes I believe in? Yes, I will. But certainly not at any cost or as an annexe to
another party."

On Afghanistan, he said Britain and America should know within months whether a new strategy, based on a report by US military chief General Stanley McChrystal, could be successful and if not a decision needed to be taken on whether to pull out UK forces.

Mr Clegg moved the Lib-Dems away from being a tax-cutting party and said lower public spending, such as a freeze or squeeze on pay, would be needed to balance Britain's books.