Friday, 31 October 2008

Bank pay - it could get nasty

I reckon the 'debate' about pay at the banks could take a turn for the unpleasant if the banks themselves don't start behaving a bit more sensibly. This week we learnt that Goldmans (which is one of the US banks taking a helping hand from the taxpayer) is going to pay out about £7bn in bonuses, a move that even the Daily Mail decried.

It's not as straightforward as some of the populist commentary suggests. I bet a lot of this is contractual, so it's not easy for the banks to get out of making the awards without the agreement of the individuals concerned. And A LOT is owed. That said, it's amazing that there isn't a little bit of restraint on the part of bankers, purely out of self-interest.

The gossip from the RBS clearout was that Goodwin actually argued for a pay-off, even as the Government was tying up the part-nationalisation. What the hell was he thinking? Next in the departure lounge is most of the HBOS board. It will be interesting to see if they try and negotiate any kind of pay-off (the chair and chief exec have already said they won't I believe).

It's a dangerous time for banks not to demonstrate a bit of sense about pay. Surveys that have been done looking at who the public thinks is to blame for the current crisis repeatedly put banks top of the list. The dominant view seems to be that bankers have mucked things up for the rest of us, and paid themselves handsomely in doing so. Further examples that seem to confirm this impression are only going to inflame the situation.

PS. The ABI is floating the idea of clawback provisions. It might not be a bad idea for the future.

1 comment:

Mark Still News said...

It is straight forward. The government should govern and sequestrate all banks funds and eradicate capitalists and let the workers run the country by setting up elected peoples deputies on workers committees.