Tuesday, June 23, 2009

Business as usual for bankers

Despite the credit crunch and the global financial meltdown, it’s business as usual for bankers. While the jobs massacre continues, thousands of small firms struggle to finance their operations and repossessions mount, bankers are cashing in – courtesy of the New Labour government.

As public sector pay deals go, the £10m package for Royal Bank of Scotland’s new chief executive Stephen Hester must be some kind of world record. The fact that it comes on the eve of massive government spending cuts and a wage freeze for everyone else, is as a clear an indictment of New Labour as anyone could wish to see.

RBS is now 70% publicly owned, rescued from collapse by the Brown government at the expense of present and future taxpayers. RBS has slashed thousands of jobs to “cut costs” and more are on their way. Hester, however, will draw a £1.2m salary, be eligible for an annual bonus of £2.4m, and get another £6.4m after three years if RBS shares recover to 70p each.

The package has won the support of shareholders, including UK Financial Investments (UKFI), the state body that manages the taxpayer's stake in the lender. Some financial institutions are reported to have said the deal may not be generous enough! And if you think Hester’s deal is over the top, apparently it is not as munificent as those for his subordinates. Presumbably RBS is spending £300,000 on corporate entertainment at Wimbledon in celebration.

Hester’s outrageous and obscene pay deal is such a straightforward example of what to expect from a bankers’ government, aka New Labour, that you might have half expected that Unite, the main trade union involved, might weigh in. But the leaders of Britain’s biggest union have spent so long cultivating New Labour, to no avail, that they don’t really feel one more kick in the teeth.

Graham Goddard, Unite deputy general secretary, could only say that Hester’s package will be met with “absolute disbelief” by front line staff and added that the “bumper” (!) pay package will leave a “foul taste” in the mouths of those who have lost their jobs at RBS. As to the government, it got no mention at all in Goddard’s statement . Goddard simply declared that the union was “appalled” that UKFI had not been “striving to save jobs” and instead had approved Hester’s pay package.

Never mind querying why UKFI has not been trying to save jobs, where have Unite’s officials been all this time? Where and when have they lifted a finger to save a single job lost as a result of the financial crisis of capitalism? Don’t bother to do the research because the answer is self-evident, as those who have joined the dole queue will testify.

UKFI's board of 15 is packed with former directors of failed banks, including Citigroup, Merrill Lynch and UBS. A senior director at Santander is in charge of Northern Rock and Bradford & Bingley, the wholly-owned state banks. There are only two people on the board from the Treasury. Their remit is to restore finance capitalism to health, whatever it takes in terms of jobs and pay packages.

In this they have the unconditional support of chancellor Alistair Darling, who told the City last week that no new regulations would be imposed on the sector and that it was a case, instead, of having “the right people and the right experience ... making the right call at the right time". Enter Stephen Hester, weighed down by his £10m package to the accompaniment of fake outrage from Unite. What a state of affairs! Time to get shot of the lot of them.

Paul Feldman
AWTW communications editor

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