Bankers' claim bonuses are not 'evil'

Bankers' bonuses are "not the fount of all evils", RBS boss Stephen Hester has told MPs. Yes, they were something of a problem in the past he says, but not now. Just to reinforce his point, Hester's claims were backed up by, er, several other bankers. Including Bob Diamond, chief exec of Barclays and HSBC boss Stuart Gulliver. Have they learned nothing at all?


Nervous

The bank bosses are also unhappy about the powers of the Governor of the Bank of England, Mervyn King. "You have the equivalent of a CEO who, for political reasons, is hired for five years and can't be fired and no real board that can check him or her," said Stuart Gulliver of HSBC. "If this was a limited company on the Stock Exchange, would we be comfortable with that?"

Well, if King is making the bank bosses uncomfortable, then he's doing something right. The banks are clearly worried about how much power King will carry under the new FSA regime - or rather, what replaces it, particularly with regard to the Bank of England's financial policy committee.

Under attack

It's an interesting attack, given the repeated warnings about the UK's over reliance on its financial sector. But the banks still seem to be in denial about its bonus culture. Or maybe they're madly semaphoring to staff - existing and potential new recruits - that they shouldn't panic, or consider jumping ship.

Investment banks continue to pay a good 50% of their revenues just for staff pay. This is a ratio that has hardly changed in the last few years, despite the global credit seizure and the collapse of many banking operations.

Yet banks continue to "guarantee" bonuses to new employees, regardless of how badly they perform. Metrics that are completely unacceptable in just about every other industry you can think of.

Meanwhile Barclays will shortly announce, it's thought, pre-tax profits for the three months to the end of September of around £1.7bn.
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