Here’s the story so far. A bank lends money to anyone who can steam up a mirror, the Chief Executive is sacked but manages to hold onto a huge pay-off and an eye-watering pension. The government then raids the Bank of England every couple of months and continues to scoop-up more and more money which it tips into the bank by the BILLION.
The Investment bankers then take this free money and use it to gamble on the Stock Exchange which is heading upwards because the government is also tipping money into other banks and into the economy itself. Regrettably, the government’s munificence leaves it with huge debts but it has vowed to do ANYTHING for the banks because the banks USED to be an important part of the United Kingdom’s economy.
Unsurprisingly, the bankers’ “gambles” earn the bank some dodgy money. Unfortunately, they forget that in a rising market, any muppet can make a profit but nevertheless they demand huge rewards for their cleverness – in the shape of bonuses.
The unelected Lord Myners who is masquerading under the soubriquet of “City Minister” announces that at least 5,000 bankers in the United Kingdom will earn more that £1 million EACH. That’s a total of £5 BILLION. One would be forgiven for assuming that even if they’re on a 10% commission, they should have produced profits of at least £50 billion. However, in reality, £50 billion represents just one quarter of the £200 billion “quantitative easing” bail-out money handed over to them in the few months by a government paralysed by the fear of upsetting the banks. The total that has been pumped into the banks since October 2008 is £850 billion!!
Taking the Royal Bank of Scotland as an example, their investment banking division made £6 billion this year and they intend to pay 25% of that in bonuses. That is an outrageous figure and should be stopped. Especially as the rise in commodity prices, which has fuelled most of their profits, had absolutely NOTHING to do with them.
The unelected Lord Mandelson calls for restraint.
The Royal Bank of Scotland will be paying a total of £2 billion in bonuses to its staff. There is an unsubstantiated rumour that the government is being blackmailed by the RBS board who say that they will resign if the government somehow manages to block the bonuses. They are all forgetting that they are the same people who were around when the bank was run into the ground. A year ago, they faced the real prospect of spending Christmas 2009 paying for their children’s Christmas presents out of their Jobseekers Allowance. That is how close it was.
Unfortunately, they were saved by the government, so they never actually managed to set foot in the real world. Hopefully they will – just after the next banking crisis.
VInce Cable has said that the government should call the bankers’ bluff. If they want to resign – let them resign.
The directors’ duty is to the shareholders which means that they have to listen-to and obey the shareholders. The majority shareholder at RBS is the United Kingdom Government. The Government should step in today and sack the lot of them. The bankers are playing a very high-risk game. Mind you, that’s what they do for a living – but with taxpayers ‘ money, supported by a taxpayers’ guarantee that if they lose their stake money, the taxpayer will provide them with more.
The newly-anointed Chief Executive of RBS, Stephen Hester was considered to be a “government man” – a steady hand on the tiller. However, even he is showing dissent by saying that the bank will lose “valuable staff” if it is unable to pay bonuses with lots of noughts.
The argument that bonuses need to be paid in order to attract and retain “talent” is exactly the same fatuous argument which is bankrupting most football clubs.
There are two months left before the bonuses are supposed to be paid. Let us hope that everyone concerned uses the intervening time wisely.
(Barclays is about to increase the pay of 22,000 investment bankers by 150% – in lieu of the proposed cut in bonuses. Clever!)