Banker Bonuses Are Too High!

February 14, 2013 5:04 pm
Stephen Hester of RBS still set to receive huge bonus.

Millionaire banker, Stephen Hester of RBS is still set to receive huge bonus.

The Chief Executive of the Royal Bank of Scotland Stephen Hester will decide whether to take his annual bonus soon and, therefore, set an example for other banker bonuses. In this era of recession and budget tightening, I do believe that he shouldn’t. As the Royal Bank of Scotland is over 80% owned by the tax payer, it isn’t fair that the public should pay out such a huge sum of money to someone who earns a huge salary without a bonus, when the majority of the population are having to tighten their belts just to afford to pay for essential items like food and heating. I’m pretty sure Stephen Hester won’t be worrying too much about how he’s going to warm up his mansions.

Also, RBS has had to make huge numbers of staff redundant in recent months. If you imagine that the majority of them earn £17,000 a year, which is around the average for call centre and branch staff at RBS, then a bonus of £963,000 could afford to pay 56 of their wages for a year. Enough people are being made redundant in this country as it is. Of course, people may still lose their jobs at RBS regardless of who receives a bonus, but you never know.

Most of us could only dream about earning £963,000 in a lifetime, never mind a year. Apparently, Mr Hester earns in three days what a soldier in Afghanistan earns in a year. And I know who I think is doing the more demanding job, and it’s not Stephen Hester. It’s an extortionate amount of cash to be given to one individual. Yes I’m aware that footballers and other celebrities can earn this amount of relatively quickly too, but they aren’t in charge of a worldwide corporation that helped plunge us into a credit crunch. The Chancellor, George Osborne, said the previous Labour government was responsible for allowing the offer of a bonus to be on the table as it had forged a contract that included a bonus clause.

It is important to point out that other senior officials at RBS and other banks are still receiving their bonus pay outs. The banks argue that if they didn’t offer these to their staff then they would leave the company and work elsewhere and, they say, this would be a great loss when they are doing such a good job. I’m not sure of their annual salaries but I’m pretty sure that they are still being paid enough annually to justify the roles they have.

The opposing argument is of course that Stephen Hester wasn’t Chief Executive of RBS in 2008, when the banking sector was on its knees. That person was of course Sir Fred Goodwin, who has now been stripped of his knighthood. There are signs now that the bank is improving, as share prices are increasing and it is making a profit for the first time in a few years.

However, RBS still isn’t fully recovered, and until it is it shouldn’t be receiving huge cash payouts when it still has much work to do. The 900,000 people who signed a petition saying he shouldn’t receive his bonus can’t be wrong.

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  • Grumpy

    Nicely balanced argument. Right on all counts Probably. There is something wrong with a system that claims that if you don’t pay people millions you will get idiots. that can not be a rational argument. There must be many clever people who would willingly work in these jobs for half or even a quarter of the “required” rate. The trouble is that the culture we have developed over the past 20 years seems to have conned people into thinking that the world can only be run by a certain handful of people, that they are therefore in short supply and that there is therefore a huge competition to get their services so they must be paid fortunes. This forgets the oldest adage to be found in most mid sized and small firms used when a person gets too big for their boots.. No one. Repeat, no one, is indispensable. One could certainly advocate reducing the huge bonuses by 50 or 75 per cent. Stand back and see where these people go. If they go there will be plenty of bright people to step into their shoes. So guess what.
    They won’t go!

    • How would you coordinate all the banks reducing their bonuses at once? Given their argument that there is a tiny skill set, highly specialised role etc, if you bonnus-cut a high manager from Bank A, London, he will inevitably find a job in Bank B, Singapore or Bank C, New York, within the year.

  • ChrisRobinson

    Completely spot on, Rachel

  • Annoyed taxpayer

    The bank is losing money, posted huge losses today, they also claimed the fines for libor fixing would be taken from the bonus pot, sorry but rbs paid 700m last year in bonuses and will pay 600m this year but the fine was 300m how is this reducing bonuses. Other company’s losing money are refusing to give pay rises and no bonuses at all why should the bankers have a bonus unless the bank makes a profit.

  • Annoyed taxpayer

    Shareholders of RBS vote against the bonuses force the bank to open their eyes and face the taxpayer. No profit no bonuses. Welcome to the real world of the taxpayer.

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