By John Knox
They just don’t get it, do they? Shareholders at the Royal Bank of Scotland have let the fat cats out of the bag yet again. The RBS chief executive Stephen Hester and his 300 top cats have got their millions in bonuses, despite the bank making a £1.1 billion loss and despite the fact that it’s 83 per cent nationalised.
Over 99 per cent of the shareholders voted for this new form of highway robbery. And they included, rather puzzlingly, an outfit called, UK Financial Investments, set up by the government to manage the taxpayer’s 83 per cent interest in this firm.
For some strange reason – which we shall come to in a moment – this quango has been given the liberty to do as it likes, despite ministers promising that they are going to stamp out the bonus culture.
Want to discuss other issues? Join the debate on our new Scottish Voices forum
It’s a funny form of stamping-out which results in Mr Hester being given a bonus of £2m for his efforts in 2010, on top of a salary of £1.2m and a later shares windfall of up to £4.5m. And he’s not alone: 323 others at the bank have been paid a total of £375m in bonuses. This was for making a loss, remember. And many of these people will have been the very same rascals who ruined the bank in the first place. So how does this madness happen? My own view is that it’s a case of Marie Antoinette syndrome. The banking aristocracy, and the political class that goes dining with them, have lived in splendour for so long they have simply lost touch with reality. To them, £25,000 a year is not the average salary, it’s the average school fee. We saw the same syndrome over MPs' expenses. The political/financial classes no longer see such robbery as wrong. They regard huge rewards as their “just desserts” for being the movers and shakers, the clever, hardworking elite of society. In fact, they usually believe they should be paid even more, such is their supposed value to the community. Politicians of independent mind need to start calling the fat cats’ bluff. I just don’t believe the world will collapse if the Royal’s 300 are not paid their bonuses. I don’t even believe the bank would collapse. It never did before the age of bonuses, not so very long ago. And even if the 300 do go abroad – which I doubt – we can well do without them. There are plenty of clever junior members of staff who would be perfectly able and happy to take their place at, say, a salary of £50,000 a year with no bonuses. Indeed, why should top bankers earn bonuses for investing someone else’s money? It’s no more risky and skilled a job than being a doctor or a teacher. A change to normal salaries might even make them more discerning over which investments they choose and thus avoid a repetition of the great crash of 2008. The main political parties have become so beguiled by the bankers that they have now all but given up on their plan to split up the banks. After the last great crash in America, in the 1920s, no bank was allowed to trade in more than one state. The crash in 2008 happened, partly at least, because we strayed from that rule. Banks became too big to be allowed to fail. We need to challenge the arrogance of the big banks. There is no one at the moment to hold them to account – not the regulators, the UK government, the European Union or the International Monetary Fund. The banks claim to be lending as much as possible to small businesses and they brush aside the evidence to the contrary from small businesses themselves. They are virtually untouchable about their investment decisions. Just see how rudely the platform party was able to deal with the Canadian oil protestors at the Royal’s AGM in Edinburgh the other day. I’m sorry bankers, the time for recriminations is not over. You need to wear sackcloth for a lot longer. There needs to be proper repentance and a genuine change in the way you do business. If only the politicians would wake up and start getting that message, too.Want to discuss other issues? Join the debate on our new Scottish Voices forum
Related posts: