25 Feb 2010

Congratulations to RBS’s hundred plus (200/300?) new millionaires, but why the disgracefully low transparency?

There was a telling moment in RBS’s press conference this lunchtime.

There was a telling moment in RBS’s press conference this lunchtime. Responding to a perfectly legitimate question about the number of bonuses of more than a million pounds paid out by the most bankrupt bank in the world, both the chief executive Stephen Hester and chairman Philip Hampton sounded incredibly defensive. ‘Why do you want to know?’ said one of them, as they attempted to work out their official figure for how much a bus driver earns (One handy RBS fact: if you strip out the investment bankers, RBS staff are apparently paid less on average than a bus driver).  

They eventually volunteered that there were “more than a hundred” RBS investment bankers who were earning ‘million-plus’ bonuses, but would not say exactly how many.

I have to say, from my perspective, given the extent of taxpayer bailouts, there is a disgraceful connivance in low standards of transparency between the Treasury, RBS & Lloyds.

On RBS’s refusal to give a number on the precise number of millionaire bonuses given as it makes multi-billion losses and calls on billions of forms of support from taxpayer, take a look at this from America. In July of last year New York State Attorney General Andrew Cuomo published an exhaustive list of the bonus bands for bailed out banks in America.

From that we know that Bank of America had 172 bonus millionaires, that the top 4 received $64m, that 8 individuals received bonuses of more than $8m etc etc. At Goldman Sachs, 6 individuals got $10m plus, 78 got $5m plus, 95 got $4m plus, 212 got $3m plus, and 391 got $2m plus.

There is no excuse for these numbers not to be published here. They are a legitimate avenue of inquiry for taxpayers wanting to know just how much bailed out bankers need to be paid to leave RBS in a state where many tens of billions of pounds can be recouped.

On top of that, it is clear that many of these bonus recipients did not repay similar bonuses from earnings from 2003 to 2007 which were the proceeds of what the FSA’s Lord Turner has called “illusory profits”.

Thankfully, Hester rolled back on his totally unverifiable comment, made this morning, that had he been able to pay more bonuses, RBS would have made a billion pounds more.

However, his media availability has been relatively poor. After giving ten minutes of bizarre sanitised clips to the in-house media service ‘the newsmarket’, you won’t see Mr Hester being held to account by Jon Snow, or Jeremy Paxman or the like.

I can not imagine a more important focus for legitimate journalistic inquiry than what has happened to tens of billions of pounds of public money.

RBS does rather well compared with Lloyds. The boss of Lloyds’, Eric Daniels, is doing no broadcast interviews. Lloyds well-paid PR executives have even barred all broadcasters from Eric Daniels’ only press conference.

That’s quite some level of accountability for the 42 per cent stake that taxpayers hold, which saved Lloyds from collapse. Remember that, the next time that Lloyds-owned Halifax tries to convey its openness with cuddly staff-driven adverts.

For some context, we at Channel 4 News have done lengthy, challenging interviews with Barclays’ John Varley, with HSBC’s Stephen Green, Standard Chartered’s Peter Sands etc.

Yet the Treasury’s approach is even more concerning. The rarely media-shy Lord Myners, City Minister, pulled out of all TV interviews at lunch time, apparently because he didn’t want to overshadow Stephen Hester.

There are of course entirely different questions to be put to the banking executives, and the man who negotiated the taxpayer’s vast investment in these executives. It is the Treasury that can determine levels of transparency, it is the Treasury that had the power to veto excessive bonuses. (Oh yes UK Financial Investments, the ‘arms length’ body that holds taxpayers’ stakes, also refuses to do interviews).

It’s worth saying in the Treasury’s defence that they under proposed new laws, all banks will have to disclose considerably more about their pay practices, but that’s only next year, if the laws pass. For now, the lack of transparency and accountability is really rather concerning.

Anyone would think that there is a major test of public opinion around the corner.

9 reader comments

  1. adrian clarke says:

    Several things should happen .Those responsible for paying the bonuses should be dismissed .Bonuses should be ploughed back into the bank to help the balance sheet.,and no bonus should even be contemplated whilst making a loss .Those in government who bailed out the bank with taxpayers money without such safeguards should resign.
    Personally i would advise customers where possible to cease using the bank.
    The bank itself should be put into administration

  2. Audrey Knight says:

    I don’t do blogging: this is my first. I think your viewers would like to see an interview with one of the bonus-receivers – preferably a new millionaire. What does he/she think about it? Would he really leave RBS if he – in these circumstances – were told that he had done really well and would do even better in the future – but, for now, it was simply not on to reward him financially.
    The mantra of “oh but we have to pay that level of bonus to keep these outstanding employees” is trotted out ad lib. Is there truth behind it? More research needed please.
    Audrey Knight

    1. adrian clarke says:

      correct .if there are that many jobs they may go but i do not believe there are .

  3. Miguel Gomez says:

    Who are those dimwits paying bonus for losses? a bonus should ONLY be paid for achiving extraordinary good results, ie=fat profits- this calls for urgent legislation and a few dismissals,

    1. adrian clarke says:

      they already get a salary that is rediculous . there is no justification for any bonus whatsoever

  4. Andrew Dundas says:

    Terms of the Freedom of Information Act (2000) allow that people responsible for spending public money should be held accountable for their spending. Otherwise the Data Protection Act protects their strictly personal affairs.
    Wouldn’t a FoI Tribunal agree that highly paid Dealers of a largely publicly owned Bank are in responsible positions and that their exceptional rewards be made known?
    Surely it’s worth C4 asking the Information Commissioner?

    1. adrian clarke says:

      are they not infact our employees so yes we do have a right to know and to veto

  5. William Kinnaird says:

    Just been watching the BBC4’s ‘On Expenses’ dramatisation. Why can’t Heather Brooke (or Faisal Islam?) do the same job on bankers’ bonuses. The MP’s expenses pales into peanuts compared to the millions investment bankers are scooping up, particularly offensive when it’s taxpayers’ money that has kept them in a job.

  6. Tommy says:

    Well, since RBS is shutting down it’s investment arm this year then it shouldn’t be an ongoing problem…

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