George Osborne defends Stephen Hester's bonus

Bankers will be jumping ship from RBS not because their commercial decisions are being hampered but because their obscene payouts are not being supported. The finance industry is behaving like a giant tyrant, wielding enormous political power without taking any political responsibility. People don't like tyrants. Rather than leaping about from one sinking ship to another, people working in the industry ought to stop and think about the whole bloody industry and its effect on everybody else as a result of its behaviour and customs. To argue that nobody should ever do anything about your bonuses because you work in a global industry and, effectively, can get away with it, is to argue that the whole world system is corrupt and needs pulling down, because it has absolutely no intention of changing itself.

How does the wider finance sector know what decision is going to be overturned next? There's a trader at RBS who has apparently earned a bonus of £4m. That's the next one the tabloids have got in their sights and, who knows what the outcome of that will be now that first blood has been drawn. A government that doesn't want to openly manage matters but instead rely on pressure behind the scenes and public opinion is not a good way to run a commercial enterprise. And a talented banker looking to change jobs today won't be considering a career at RBS.

Of course, the City spent years complaining it was over regulated and was stuffed full of very clever people who should be left alone to get on with what they were brilliant at and that stupid governments were crushing enterprise and didn't understand anything. Then they stuffed up the world economy because it turned out they didn't understand anything, got given loads of cash so that the entire world didn't go into meltdown and now they are telling everyone to butt out again. They really are stupid. And they think everyone else is stupid...

Oh yes, and I can see the Conservatives would have ensured he got a contract that treated him entirely differently from every other chief executive in banks not largely owned by the taxpayer - not. What went wrong here is that bankers and their boards in general have no morals and do not see morality in the boardroom as being a desirable attribute - it would just be bad for business to care about anyone other than yourself (even caring about the company you work for and its employees would be stretching your caring cells too thin). There is a difference between being entitled to something and deserving it, and between being offered something and accepting it which has entirely passed them by.

And very amusing that the Tories pretend giving shareholders and employees a tiny bit more say on executive pay will make any difference - after all, we wouldn't want the boards looking "weak" by having to do what their shareholders want, rather than what the boards advise, would we? The stupid shareholder doesn't know what's good for business or what he's talking about, unless he's another overpaid executive of an institutional shareholder, of course, in which case he understands the huge importance of overpaying someone just so that they carry on getting out of bed in the morning and doing their job.

It shouldn't have come down to the decision of the recipient.

It had to, because of the way the Labour government permitted the contract to be written in 2009, and the way they had the National Interest put into an arm's length body.

This whole situation could have been avoided if they had done a more competent job on either of those aspects. But foresight nor understanding of the financial centre just aren't their strong point.

Instead they stand there and whine about a situation that was entirely created by their actions. Very weak.

The RBS board now has a serious problem. If every decision they make is going to be overturned by either the government or public pressure, they are not in full charge. It won't inspire confidence anywhere they are doing business and will make the job of getting the bank back into profitablity more difficult. The villification Hester has received has been appalling. I would expect him and many of the senior management team to step down sooner rather than later.

BBC now reporting that Stephen Hester has turned down the bonus.

... and of course the costs of doing business are borne by the owners, fgs.

cogito, lots of people choose jobs that will give them a sense of satisfaction. Jobs they enjoy, where they can contribute to society and best use their skills. I know bankers are just greedy but it's odd that it doesn't occur to them that other people might have very different values. I don't want to exploit people for a living, for instance.

A cleaner has some value - they do an important job and it would matter if they stopped. Someone who runs a business that manages to avoid exploiting suppliers, workers and customers has some value. Someone who gambles with other people's money has a fairly limited value, especially when they lost all of it and had to go begging to the government.

I'm afraid I just wouldn't go into banking, because I could think of no reason for doing so besides the money and I would rather work for something a little bit more inspiring than JUST the money. That is, after all, one of the arguments for not paying teachers much money - they are supposed to be in it for the joy of teaching, not just for the money. So no, personally, I would never do a job just for the money, unless I had no other option - which would mean I would be right at the bottom of the salary scale, not right at the top where my qualifications would open an awful lot more inspiring choices to me.

Money to live and enjoy life are very different to £35million.

Do you do your job for the good of society rabbitstew or do you do your job for the money? Personally, I work for the money and suspect the vast majority of people do the same. Good works I can do in my own time.

rabbitstew Sun 29-Jan-12 12:37:57
Unfortunately, there are probably many better people to run RBS than Stephen Hester, but none of them chose to become bankers in the first place. And the more you reward bankers, the more pushy, greedy, nasty, selfish people will be attracted to the sector and the more everyone else will be turned off by it. Does anyone know a banker who chose that profession because he wanted to do something good for society and if so, do you know what happened to him?

I wish there was a 'like' button sometimes!!

It's such a shame Hester is a comprehensive boy and not an Old Etonian as that would have dovetailed so much better.

Unfortunately, there are probably many better people to run RBS than Stephen Hester, but none of them chose to become bankers in the first place. And the more you reward bankers, the more pushy, greedy, nasty, selfish people will be attracted to the sector and the more everyone else will be turned off by it. Does anyone know a banker who chose that profession because he wanted to do something good for society and if so, do you know what happened to him?

"I understand that RBS is declaring a profit of £2bn for the last quarter."

My point exactly. So why doesn't some other bank come along that gives its customers way better value, by declaring lower profits and incurring lower costs? It's not like there's no room for manoeuvre in the market...

"of course we are paying their wages, we are the owners of the sodding company!"

That's not how it works. RBS has a profit and loss account that records, on the one side all the revenue coming into the bank and on the other other side, the costs of doing business. Wages are a cost of doing business, same as renting premises, replacing the IT system or paying the electricity bill. The taxpayer may own the majority share in the business and may expect a dividend on that investment but we are not standing there every month, writing out cheques to pay for current expenses.

"We couldn't pay any more because we wouldn't be profitable in our market. Why doesn't the same apply to banks?"

I understand that RBS is declaring a profit of £2bn for the last quarter.

Edam- don't you understand that stepping in to rescue the insolvent banks was for the wider good? Iit was the least worst outcome and I though Alistair Darling handled it remarkably well.

Lloyds were perfectly solvent and required help only as a result of being talked ino taking on HBOS.

So where's the "free market"? Why aren't salaries and bonuses driven down by competition just like they are in any other market? The highly-skilled CEO of my (medium sized, very successful) company makes around £300K with a 30% bonus that's based strictly on his performance and the company's profitability. If we do badly then he gets no bonus at all. We couldn't pay any more because we wouldn't be profitable in our market. Why doesn't the same apply to banks?

edam I agree it's fantasy to suggest that you can't get someone to do a competent job in banking for less than say £200k. This is just trite propaganda to maintain the stautus quo of the fat cats.

Everyone knows that wages at the top are super inflated, not reflective of the skills and abilities required to do the work and that this serves nobody but the few recipients as indeed illustrated by the statistical inabilities of fund managers to outperform the market. Our pensions pay for theoutrageous lifestyles of these traders

Sorry but that's simply rubbish. This wasn't a little local difficulty confined to one or two minor banks. This was the collapse of the developed world economies. The collapse of RBS would have brought others down too. The country came within minutes of the cash machines running out of money and electronic payment systems collapsing. None of the banks would have survived. They are all underpinned by the taxpayer guarantee.

Heart surgeons don't earn bonuses...