Bonus payments to bankers are far more problematic than the media is allowing. Banning bonuses and capping pay sounds about right for companies that needed tax payers’ cash in order to open their doors. But part-nationalisation was always going to bring about such headaches, and RBS is calling for morphine not paracetamol.
Despite colossal losses, employees within RBS will have smashed targets and proven themselves thoroughly deserving of the rewards offered when negotiating their terms of employment.
Of course, public contempt is such that our knee-jerk reaction is to cease and desist on ALL bonuses. Today’s coerced apologies will do little to reverse that derision. But this would almost certainly breach employment contracts, anger deserving staff and demoralise a non-too-confident team.
I can hear myself saying, “So what? They ruined the business. We own 70% of RBS and if they don’t like it…” Well, we need the banks to drag themselves back from the brink and pay back our investment. We do hope to get our money out remember and like it or not, we’re in bed with these bankers.
Whipping all RBS staff with the same ferocity and capping salaries will lead to a two-tier City: capped, non-bonus work for the Chancellor; and, non-capped, bonus-rewarding. Barclays appear to want to be in the latter group. Which of the two sectors do you think the brightest talents will be attracted to?
Carl Icahn writes, “The real problem is that many corporate managements operate with impunity—with little oversight by, or accountability to, shareholders. Instead of operating as aggressive watchdogs over management and corporate assets, many boards act more like lapdogs.”
Many would vote for re-opening Alcatraz to house Sir Fred and his brethren. The negligence and recklessness of these ‘industry leaders’ and their ilk has brought the world to its knees. The greed of bizarre derivatives and securities filtered through their investment arms like heroin. They’re more deserving of pistol-whipping than a pay packet. These guys should get nada.
But below board and senior management level the bonuses will probably stand, albeit deflated and with more leaning to deferment. And rightly so I think. Staff should be grateful the bank is still solvent and paying salaries, let alone bonuses. Scores of other employers weren’t felt so valuable to the UK that they be given CPR (think Woolies, Adams, JJB et al). Banking has proven itself a special case. I pray it can do something special in return.
Bottom line: the reason this all smells like a rotten carcass is because that’s exactly what we taxpayers bought.
[You noticed how few females have featured in this whole debacle?]
Photo credit: Eladesor