Is it right for RBS to pay out a £1.5billion bonus bucket?
They say that if they don’t pay these bonuses, prominent staff will leave and go to other banks that do, which would in theory cause RBS to struggle as a going concern. On the other hand, 75% of that is our money: think of the impact £1.125billion could have on any ongoing public sector project.
RBS have said they don’t want to change their policy because one shareholder thinks they should. Unfortunately for them, though, that one shareholder saved the company after it racked up the biggest corporate loss in history.
MPs have been getting stuck in, which I find quite laughable. We all want to take their “bonuses” off them (their expenses) and they certainly don’t like it; instead wanting to boost their salary by £40,000 per year to make up for a perceived loss in expenses. I thought expenses were expenses, not supplementary income, but there you go.
Anyway Harpie Harperson has branded the RBS board as reckless, whilst unsurprisingly the Lord of Darkness has offered sympathy to them (in exchange for a… bonus?). The Liberal Democrats’ Vince Cable has proffered that the Government should call the bluff of the directors and let them resign if they don’t like it.
I think it’s a bit pointless clamping down on bonuses because like Barclays are doing, banks will simply increase basic salary to compensate with the net result being the same. These bankers do create serious wealth for banks and their bonuses pale into insignificance compared with the money they create for their employer. If someone made me £200million I’d be happy to pay them a multimillion pound bonus.
But on the consumer side, banks are still not lending at reasonable rates. Taking a look at mortgages you’re still paying around 3% above base rate which is a hell of a markup. You can’t even get a decent savings account and in some savings accounts with a variable rate the bank now takes interest from your account rather than adds it to it!
They’re on about breaking up these large banks which might be a good idea because it would limit consumer exposure to the risk incurred by any one bank, but what of HSBC? They didn’t get any Government money and they still pay bonuses so is it counter productive to break up Lloyds and RBS and leave one banking juggernaut to gobble up all the customers (which they are doing quite successfully already)?