We’re not Osborne’s puppets says UKFI

Robin Budenberg denied UKFI was politically controlled. Picture: PA

Robin Budenberg, outgoing executive chairman of UK Financial Investments (UKFI), said Chancellor George Osborne had proposed steeper cuts in bankers’ pay than were “commercially acceptable”, and so the body limited their scale.

“I believe we make sure that banks are able to run in the best interests of their shareholders,” Budenberg told cross-party MPs at a meeting of the Treasury select committee.

He said: “It’s clear that he [Osborne] takes a very active interest in certain issues… remuneration is a very clear example of that. He comes at things, naturally, from a different point of view that a pure commercial point of view would be.”

The defence of UKFI’s “arm’s length” status from the government came after committee chairman Andrew Tyrie MP queried whether the semi-quango ever took “instruction” from its political bosses.

Budenberg and James Leigh-Pemberton, UKFI’s executive chairman-designate, also said Osborne had been keen for a quicker sale of RBS’s American retail banking business, Citizens.

“We persuaded him this [a quick sale[ was not the right view and he accepted that,” Budenberg said. The taxpayer currently holds 82 per cent of RBS and 33 per cent of Lloyds. MPs quizzed the UKFI duo as to whether a minimum requirement for an eventual full re- privatisation of RBS would be for taxpayers to get the £5 “buy-in” price in 2008, but were told that would only be one factor.

Leigh-Pemberton said: “It’s difficult not to take it [the buy-in price] into account but it cannot be the only consideration.”

He said UKFI might have to say “never mind the in-price”, but focus on whether the RBS share price reflects fully the bank’s future prospects.