The Guardian has reported in the last few minutes:
Bailed out Royal Bank of Scotland reported losses of £1.1bn for 2010 – but still plans to pay out bonuses of £950m to its bankers.
The contempt bankers have for society is evident in the comments made by Stephen Hester made. The Guardian reports:
He admitted that he was not able to hire staff as easily as he hoped because the bank has often become a “political football”.
“Our ability to attract, retain and motivate the best people is still not what we want it to be. Our business challenges and the external environment lead to management compromises that add risk to the achievement of our business goals. We are working hard to move forward and balance staff motivation with external acceptance that past mistakes have been addressed,” he said.
Motivation is not created by £950 million in bonuses?
If RBS had paid no bonuses, then there would be just a small little loss. Which would mean that the government would get no tax money: you don\’t pay 28% corporation tax on a profit that hasn\’t been made.
If you pay out £950 million in bonuses then of that £950 million, 63.8%* will go in tax to the government.
So, the government, all those front line services, are better off by £606.1 million.
Well done the Royal Bank of Scotland!
In more detail, we might look at the actual results:
Hmm, no, that\’s not formatting, so have a look at page 23.
You will see that the City style stuff, the markets, the investment bank style bits where people do get large chunks of wonga as a bonus made huge great big gobs of money.
You will also see that the losses came from \”impairments\”, losses on past activities, and these losses were in retail and commercial (Ulster Bank did something very wrong there).
That is, the peeps getting bonuses made huge amounts for the bank, the people who don\’t normally get huge bonuses (retail and mortgage managers etc) in the past lost huge amounts.
At which point I defy you to tell me that paying bonuses is a bad idea.
* Assume, a not unlikely assumption, that all those getting bonuses are already at the top tax rate of 50%, add 13.8% employer\’s national insurance.