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From: Article posted to home page Home, 20 January 2014: Socialist Party news and analysis

Search site for keywords: Pay - Bonuses - Bankers - RBS - Banks

Pay me - I'm a banker!

Nationalise the banks to stop the fat-cats' rip off rewards

Matt Gordon, Bristol Socialist Party

It is a tough time for bankers. The EU has decided to cap bankers' bonuses at 100%, and so condemned those earning more than 410,000 to "only" get paid double their salary.

Luckily for the bankers, they have loyal friends in the persons of David Cameron and George Osborne, who are gallantly calling for bankers at RBS to receive 200% bonuses instead.

RBS - the loss-making, scandal-riven, incompetent giant which is 82% owned by the taxpayer - hasn't even asked the prime minister and chancellor to fight its corner, at least publicly, but they are doing it anyway.

Mark Carney, Governor of the Bank of England, has also proven to be a good chap - he also opposes the "crude" EU bonus cap and instead thinks bankers should get paid the market rate, ie as much as they can possibly get away with.

Struggling on high pay

Have no doubt that it is a tough time to be banker, especially in the City of London. After all, they have only received a pay rise of a third in the last year -data from the European Banking Authority shows that the top 2,700 now receive an average pay packet of 1.6 million - and some lower paid bankers have confessed that they are "struggling" to live on salaries of 500,000 a year.

Cameron, Osborne and Carney are good enough to let some minor misdemeanours at RBS slide. Things such as pre-tax losses of 634 million in the third quarter of 2013 alone, revelations that the bank was forcibly driving small businesses to the wall in order to seize their property and maximise profits, technical issues that potentially affect 250,000 customers every single minute, and 30,000 job losses since 2008, all of this does not impact on the decision to support massive bonuses.

You could be forgiven for thinking that banks are intentionally doing all they can to wreck the economy and play the villain - HSBC recently announced that 3,100 staff were to be "demised" - but it seems that the Con-Dem government can see through all that, showing loyalty to the bankers through thick and thin.

The sky's the limit

After half a decade of recession, austerity and plummeting living standards, bankers' bonuses continue to increase. In 2012, 95 bankers at RBS each received a bonus of at least 1 million. These figures were dwarfed by rival banks, such as JP Morgan who paid 126 London staff 2 million each, and Goldman Sachs London who paid 115 people a whopping 2.7 million each - at least!

The new EU regulations on capping bonuses won't make any difference, with or without Cameron and Osborne opposing them. Barclays is now handing senior staff a "third payment", a pay-out classed neither as salary nor bonus and so exempt from the restrictions.

Other banks are making similar "cash allowances" or increasing share awards. For example, the new RBS CEO Ross McEwan was handed 1.5 million in shares simply for starting in his new post. That is not the sort of recruitment incentive you see at the Jobcentre!

As well as this, if the EU rules are imposed, banks will simply decrease bonuses but increase salaries. That is why Ed Miliband's support for the EU cap is so ineffectual.

Abolish bonuses

The government could make whatever decision on RBS bonuses it wanted to - instead of fighting to increase them, Osborne should scrap bonuses altogether.

Any bank, especially one that is majority owned by the British people should not be allowed to ruin small businesses, defraud customers, cut thousands of jobs or reward the bosses with bonuses.

The only way of stopping this is to take the banking system into full public ownership to be democratically run by elected and accountable committees that should include representatives of finance workers and service users. It could then be used to support struggling families and small businesses, to break the stranglehold of the super-rich minority over the economy, as part of developing a stepping stone to a democratically run planned economy in the UK and the world.

This version of this article was first posted on the Socialist Party website on 20 January 2014 and may vary slightly from the version subsequently printed in The Socialist.

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The coronavirus crisis has laid bare the class character of society in numerous ways. It is making clear to many that it is the working class that keeps society running, not the CEOs of major corporations.

The results of austerity have been graphically demonstrated as public services strain to cope with the crisis.

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