The Royal Bank of Scotland (RBS), which is 80 percent publicly owned and has been since it was rescued by £45bn of public money in 2008, has hit the headlines again for controversially paying out £421m in bonuses to its top employees despite announcing a figure of £3.5bn in annual losses. This takes the running total of losses to nearly £50bn since it was bailed out in 2008.
RBS chief executive, Ross McEwan, who was hired from Commonwealth Bank of Australia in 2012 to run RBS’s retail side, defended the bonuses, saying that he understood public concern, but that the bank needed to pay “fair pay” for people in “fairly technical jobs that we need to get right”.
Pointing all ways to appear all things to all men, he has also gone on record on BBC Radio 4’s Today programme, describing the payment as “outrageous”! Of course, he also added: “It’s not something I am going to change or can change today.” Mr McEwan rather wants to change the focus onto “rebuilding the trust of customers”.
So, being outraged, along with the majority of the customers, but doing nothing to stop the bonuses will rebuild the trust of customers? Maybe not, but he has very publicly decided not to take his own £1m bonus this year. Before we all get lost in admiration for this saintly soul it would do well to remember that his salary is already £1m per year, and that when he came to RBS he was given share awards under the bank’s three-year incentive plan along with another £3m-worth of shares to buy him out of bonus awards he was due to receive from Commonwealth Bank of Australia.
We never cease to be amazed at how very well-paid people have to be given huge financial incentives to work, whether they get results or not, and yet, the same people (also highly paid) who justify and arrange this have no qualms at all in using various threats and acts of violence – not least through wage cuts or sackings – to low- paid workers and their families, supposedly to give them an ‘incentive’ to work themselves into physical and mental illness and early graves.
Coming back to Mr McEwan’s words of wisdom, in 2014 he described RBS as “the least-trusted company in the least-trusted sector of the economy”. And he then waxed lyrical about how that would be changed by being friendly and understanding to customers while “finally” stopping the astronomical losses that the bank has continued to make.
As to the method of that ‘recovery’, it boils down to this: when the bank has consumed enough of the public purse, and trimmed off the less profitable of its businesses (many of which have broken laws or regulations both here and abroad and are still costing RBS in huge fines and penalties as a result); when it has axed the jobs of thousands of workers who bear no responsibility for these acts and their consequences, it will be floated again as a wholly-private entity at knockdown prices – much to the joy and merriment of those large institutions and billionaires who will then reap fat profits from it … until the next time it needs saving with public money.
Meanwhile, RBS is to have a new chairman in the person of Sir Howard Davies.
The appointment was announced as RBS pledged to sell operations in 25 countries. (Even though they are getting rid of these, RBS has still made a £2.2bn provision for further possible fines for ‘conduct’ issues, including foreign exchange manipulation and payment protection insurance mis-selling.)
Showing just how these ‘top employees’ move around the financial trough, RBS has said that Sir Howard will join RBS’s board at the end of June, once he has issued his final report as chairman of the Airports Commission. Alongside his RBS chairmanship, Sir Howard will retain his non-executive directorship of Prudential, but will renounce his chairmanship of Phoenix insurance group and his role on the board of Morgan Stanley.
In financial circles it is apparently ‘understood’ that, following the general election, the new government, irrespective of the result, will start advertising the privatisation of the 80 percent of RBS that is currently publicly owned, in a sale that will likely include a large-scale ‘Tell Sid’-style offer to the public, allowing us as individuals to buy a few paltry shares of what we now collectively (on paper at least) already own.