Notwithstanding public anger against fat bonuses, UK’s five big banks are set to reward their CEOs with generous payouts as the common man stares at uncertainties over the governments planned job and spending cuts.
The Royal Bank of Scotland and Lloyds bank were the biggest beneficiaries of the tax-payer’s money and are still largely government owned. Despite being barely profitable, RBS, Lloyds, Barclays, Standard Chartered and HSBC will go ahead with their planned bonus payouts, said the directors and investors; risking public backlash.
One senior banker reasoned the bonuses saying: “We don’t want to see a repeat of last year when no one felt able to take their bonuses”. It may be recalled that the banks CEOs were unable to collect their bonuses last year giving up benefits worth £30 million. Some had donated their entitlements to charities.
However, bankers felt their gestures were not appreciated by the political class and the public. Recent political developments like the weakening influence of the liberal democrats have emboldened the banks further. They are aware that the aggressive stance taken by Deputy Prime Minister Nick Clegg and Business Secretary Vince Cable have not meant much and are unlikely to restraint pay-outs or re-impose heavy bonus-taxes as last year.
“They don’t operate in a social vacuum”, Mr. Clegg had said last month saying government will not remain mute spectator to the developments.
“There has been generational change, now is a good time to ensure that top executives are appropriately remunerated so that they are not lured abroad or into hedge funds”, said an asset management executive.
The top three of the five banks – Barclays, HSBC and Lloyds have appointed new chief executives and investors think that the time is opportune to break away from past practices.
However, at least two banks – HSBC and Barclays are aware of the possible fallouts and have decided to moderate executive payouts.
Interstingly, these two banks didn’t require any taxpayer money during the crisis and found their own methods of staying afloat.
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