Banking bonuses show a lack of restraint in era of austerity

Editor’s Blog Posted 12/02/14
Barclays has become the latest bank to confirm its continuing culture of bonuses, amid concerns over the thousands of job losses within the company

Just when you thought that we’d had quite enough major issues with the banking sector, it seems this soap opera style saga has even further to run.

The latest installment comes courtesy of Barclays, which simultaneously announced 7,000 UK job losses for 2014 and that its bonus pool was up 10% - with its latest performance figures revealing a huge £5.2 billion profit.

This level of insensitivity amounted to a hugely negative piece of PR, not to mention the fact that it flew in the face of Business Secretary Vince Cable’s call for lenders to move away from the excessive bonus culture that played a significant role in the chain of events that led to 2008’s era-defining recession.

Still, at least head of Barclays, Antony Jenkins, attempted to lead by example with some restraint in not taking his own personal bonus for the year.

Clearly, the banking industry remains an integral part of our economy and it’s hard to argue a position that the additional hard work of staff should not be financially rewarded in some way – but surely the most equitable means of achieving this is adjusting basic wages on a far more modest level than the dozens of thousands per employee that have been reported? Given the billions that have been lost to the taxpayer over this critical issue over the past six years, a more reasoned approach is urgently needed.

Chancellor George Osborne has on several occasions last year attempted to diffuse the situation, insisting that we really shouldn’t be engaging in ‘banker bashing’ as the country grapples with reviving the economy.

That’s all very well coming from the man whose job it is to appease said bankers, but the simple question remains of whether the likes of Barclays, Lloyds and RBS should pay out bonuses during a time of austerity and employment uncertainty for many throughout the region.

As far as I’m concerned the answer should be no – or at the very least insist on a bonus cap, with any additional profit dividends being ploughed back into the banks’ reserves to provide better rates and conditions for their customers.

So long as we retain a banking system which retains a thirst for paying its top earners even more in the form of bonuses, there will always be a risk that somewhere down the line there will be further financial impropriety along the lines of the Libor rates fixing scandal that caused a huge recent stir.

It remains entirely baffling to many observers, including myself, how not a single person within the banking sector has been jailed for the levels of multi-million fraud that have been committed over the past few years by a selfish few within our major banking institutions.

So why is this? If they were in any other industry then they would surely have been packed off to the cells in their droves for their crimes. But for some reason, it seems that the unscrupulous few who have been at the core of banking scandals have been allowed to quietly drift out of view – in the hope that the public becomes bored and moves on to the next news item. But someone surely has to be held account for what stands as a deeply woeful chapter in our nation’s financial record.

With a new economic watchdog, the Financial Conduct Authority recently put in place, we can but hope some semblance of normality free from controversial incident returns to our banking system in the near future – which would be a very welcome bonus indeed.

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