It is only a matter of a few short weeks since there was a furore in the UK surrounding hefty banking bonus payments. At that time it was highly paid executives of the Royal Bank of Scotland that were to receive even heftier bonus payments. Good sense prevailed and two men in particular did not take the payments. Whether that would have been the case without the public outrage that ensued is not clear. It seems though that no lessons have been learned.
Before this report goes further this blogger would like to point out a few personal observations here. It seems that opponents of Labour in the UK merely saw the outcry as some form of sour grapes. A means of gaining political leverage. A case of knocking a couple of working men who were deserved of their whopping bonus payments.
Plenty of people in the UK looked at it a little differently. RBS is partly state owned after a disastrous few years, financially that is. Current executives may be helping to turn that around but there is still a long way to go. As yet the taxpayer is still well out of pocket. In order to become financially sound many RBS jobs have been cut. Further job cuts are imminent. In the UK the banking sector are not poorly paid.
OK, so now that we have got that out of the way, today, February 22, 2012, RBS have announced that it will be making bonus payments totaling £400million. WHAT!
The bonus payments will be made to the investment banking staff of RBS for the work they carried out in 2011. As if to make us all feel happier at this news it has been revealed that this "banking bonus pot" is 60% less than the previous year. WHAT!
As part of its report on this news, SKY reported that the bonus payment news was released as, "the bank prepares to report an expected full-year loss of up to £2billion, making the prospect of the taxpayer breaking even on the £45billion investment made in RBS during the 2008 banking crisis as remote as ever. WHAT!
It is doubtful that this blogger is not the only person in the UK feeling annoyed, shocked, angry and sickened by this news. In the last year restructuring of RBS has continued, leaving thousands of people without a job. Was the restructuring done then simply to offer a bonus to bankers who many may consider are already overpaid?Surely without such bonus payments some jobs could have been saved?
£400million may not sound a lot, if millions of workers are sharing the payout. As it is, there will be scores of bankers receiving a bonus package of around the One Million Pound mark. What!
Currently 80% of RBS is owned by the taxpayer. It has been claimed that the latest bonus payments will be made in shares for the biggest payouts. These will be deferred over a three-year period. Does this make them easier to swallow? No.
Coalition Government Ministers, that is the Tories and the Liberal Democrats, have insisted that any cash element of the bonus payment must be capped at £2,000 but they have agreed the rest of the £400million package.
Chief executive of the British Bankers Association, Angela Knight, has once again gone on record with what appears to be a form of blackmail. That is claiming that without the necessary rewards the bank will sink and will not attract the best staff. So much for national pride or wanting to help the country. Remember the highest paid bankers already receive much more as far as a salary package goes, than many other people in the UK.
One has to wonder with such excessive pay packages in the past what went wrong. After all if we were attracting the best bankers, by paying the best salaries, why is RBS is such a sorry state? It seems to this blogger that Ms Knight's assessment makes no sense and so should carry no clout either .Here's an idea or two though folks:
On a final note many companies in the UK pay annual bonus payments also. They are not usually as generous as banking bonus payments but they do exist. Most are transient though. If the company does not have a good year the bonus payment for that year is scrapped. Makes sense to this blogger.
Eileen Kersey manages TEK Staff Blog