Profits and bonus bonanza for UK banks
It's almost certain huge bonuses will follow, though David Cameron claims he wishes to curb them. It's thought 2011 bonuses - shortly to be dispensed - will come in at around £4.2bn. Meanwhile the banks are likely to make more job redundancies this year, on top of sizeable cuts already announced.
The British taxpayer has already thrown some £45.5bn at RBS to keep it going, yet its value since has plummeted. RBS is in the process of shrinking its investment bank activities, so the news of yet more bonuses to staff will be a difficult public relations exercise for the bank.
Roll back to 2007 and RBS had capital equivalent of under 2% of its assets, if RBS was to measure up against the latest Basel III requirements. Terribly fragile. Unfortunately the FSA wasn't interested at the time, despite being the UK financial services regulator.
Deserved?Or, more likely, the FSA did not the skills to know what was going on, as well as being overly-reliant on the numbers coming out from the banks themselves (and such values can't often be known until assets are actually sold on).
This light-touch attitude attracted an awful lot of questionable business as a consequence, much of it encouraged by Gordon Brown and Tony Blair. Not one RBS director was ever fired. It's also worth remembering that despite much talk of the tax-payer support of the banks, the taxpayer, at the end of the day, doesn't own any of these banks. It's investment from the government only.
To add insult to injury, the Telegraph is reporting that some bankers may sue their employer if they don't get the bonus they feel they deserve.