I’m always in two minds when it comes to a discussion of banker’s bonuses. For one, I don’t think anybody should be punished for working incredibly hard to get into such a fantastic position in life. On the contrary, I’m one of those people vehemently against greater taxes for the rich – while a lot of people may have their wealth inherited, if I ever end up in that position, I’ll have worked incredibly hard to get there, and I don’t want to feel guilty about it.
Stephen Hester (Chief Executive at RBS) was at the end of such criticism recently, it having been announced he was to receive a £965,000 bonus pay out from his shares. RBS having been saved, literally, by the taxpayer in 2008, this amount seemed excessive to say the least. But Hester’s colleagues were keen to stress he had been doing a good job in turning the bank around, and should be rewarded accordingly.
But let’s consider the term, ‘bonus’ for a second. In latin, bonus translates to something, ‘good’ overall. The problem may be with actually labelling what is this pay out from Hester’s shares as a ‘bonus’. To the general public that insinuates there is something good to be rewarded. It having been announced today that RBS lost £2bn in 2011, that’s certainly incredibly debatable.
Hester eventually relinquished this bonus, probably before it would have been vetoed in Parliament. It probably would have been a great mistake for the semi-nationalised bank to fight parliament against it. After all, parliament is a representative of the people. And the people would have been largely against this. But what right does parliament have to control the banks? Is it fair? On the whole, probably so. If the banks are going to engage in the reckless behaviour that was seen in the past, and therefore allow their debt to need to be paid off by the taxpayer, this does seem just. Parliament being the link between the taxpayer and the bank needs to act in the best interests of the people overall.
But of course, the damage has been done. The moral of Hester and the bank itself has been damaged. In the end there's always going to be the eternal battle between the control the banks can exercise and the will of the people. WIth the market continuing to prove unsteady, it seems a battle that is long to continue.