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The Royal Bank of Scotland causes a right royal stink

Page last updated Thursday, 04 February 2010

The Royal Bank of Scotland causes a right royal stink

I was incensed to read today that RBS is to pay their staff bonuses in shares that can then be cashed in after just 12 weeks. Apparently this is their way of sidestepping Government policy on the 50% ‘share tax’.

You and I own 84% of this previously insolvent bank and what voice do you have? None, so I will shout on your behalf.

There is no way the bonuses should be paid in any shape or form. Instead the money should be added to the balance sheet so that the bank can start lending again to the firms and consumers that they so eagerly threw money at before they got in a mess.

I often hear from commentators that the bonuses have to be paid to keep ‘key’ staff and that the present employees are irreplaceable. Their argument is that if ‘key’ RBS staff leave then the bank will flounder with a risk of it going under then there will be no bank and the public will lose their money.

All the banks would argue that they don’t want to pay bonuses to anyone, they pay bonuses to retain good staff so they can remain profitable.

I argue that you should replace the lot as there are plenty of young talented individuals out there looking for work and would be happy just to receive a decent wage in these troubled times and still do a pretty good job as well.

There are only so many jobs around for these bankers; once the top slots are filled they will be grateful for anything.

It is important to note that my disgust is not aimed at the other banks. Whilst I am still not happy with the bonuses they are paying, RBS is different because we control it and have kept it alive. It’s not the staff’s fault the bank got in to trouble – it was management failings and a culture of greed.

All this is really irritates me as the bank is lucky to still be in existence. Their business model over the past few years has been flawed evidenced by the fact that they were insolvent and rescued by us, the tax payer.

It is arguable whether RBS should have been nationalised last year and even more so with the recent revelation that the Bank of England (BoE) bailed out RBS and HBOS with a secretive emergency loan of £61.6bn last autumn, apparently to prevent loss of confidence with the financial system. This was probably the best time to have gone for full nationalisation; we didn’t and now look at how the bank says thanks.

If the consumer/tax payer had not rescued the banks then the board would not be in place nor would the so-called high fliers still have their jobs. RBS staff should be thankful they have work and a regular income which enables them to meet their monthly commitments such as mortgages (subsisised?), food on the table and heating bills, unlike many consumers.

No-one is irreplaceable. I feel we should have nationalised the bank and called it the ‘People’s Bank’. Then start in earnest in bringing normality back to those business and consumers that have been stuffed by RBS.

To get the message across consumers need to boycott the bank, withdraw savings and find alternative banking arrangements.

Just think of how all those consumers caught up in uncontrollable bank charges feel? Some that run into the thousands of pounds, and it is these which are helping to fund the high bonuses.

I for one will not touch RBS with a bargepole, not now or the foreseeable future. One has to take a stand.

We should not be rewarding failure and then be held to ransom by what is an insolvent bank.

I wonder how many consumers are saying ‘told you so’.

Remember, banks are not here to help consumers they are here to make money out of you and me and aren’t they doing just that!

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Basically, if RBS don’t retain the staff they won’t be profitable and they won’t be able to repay the loans.

The last time Labour got involved with a bank – Northern Rock - they single headedly managed to lose all of the customers the bank had, screwed the shareholders over and made many of the customers lives very difficult by forcing them on to SVRs when they had nowhere else to go. The only people that benefited were the other banks. If managed properly Northern Rock with its prime customer base would still be profitable.

This banking crisis has cost the UK economy at least 5% of the economy – some say 7.5%. That’s like a 7.5% tax on GDP forever, the business is lost. On top of a 12% loss in productivity in the past decade the UK is not doing well. If the government continue with this short-sighted tax on bonuses banks will leave London and we will lose even more. As it stands taxation accounts for around 65% of the gdp – up over 20% in just over 10 years.

I don’t quite think people understand the seriousness of what’s happened with the economy. People are blaming a lack of regulation, but the real problems lie with inflation and huge consumer borrowings – all fuelled by interest rates that were far too low. People were encouraged to be irresponsible and the banks cannot be blamed for the mismanagement of the economy by our Government.

Labour have done a fantastic PR job blaming the city and the media have lapped it up because they don’t understand the complexity of what has happened and is still happening.