Top banks cut executive bonuses

Bonuses are often spent on fast cars

UBS and Goldman Sachs will not pay bonuses to their top executives for 2008, the banking giants have revealed.

UBS's chairman and board of directors, and Goldman Sachs' top seven executives, including its chief executive, will not receive bonuses.

UBS said other employees could still be in line to receive a bonus.

As a result of the financial crisis, banks have been under a great deal of political pressure to severely limit excessive bonus packages.

UBS has overhauled its entire bonus structure, which will now be linked to the firm's profitability.

"UBS's new compensation model will be focused on the long term and more closely aligned with the value creation of the firm," the bank said.

Political pressure

UBS's move follows pressure from the Swiss finance minister, Hans Rudolph Merz, who has said that the initial idea behind bonuses had become "partially perverted".

In October, the Swiss government pumped 6bn Swiss francs (£3.37bn;$5.02) into UBS as part of a rescue package to help strengthen the country's largest bank.

At Goldman Sachs, chief executive Lloyd Blankfein and six other top executives decided not to pay themselves any bonus.

Spokesman Lukas Van Praag said they made the decision because they felt "it was the right thing to do".

Last year, Mr Blankfein received a bonus worth nearly $70m (£46.95m). This year, he will receive just his salary of $600,000.

Other banks are expected to follow suit by withholding bonuses.

Excessive bonuses paid to executives of financial institutions that have lost billions of pounds during the credit crunch have been widely criticised.

Indeed, governments across the world have insisted that excessive bonuses be addressed as a condition of bank bail out packages.