There is considerable anger about the pay and bonuses being paid by the state owned banks, especially where they remain in loss overall. Labour say they believe in fairness and justice. Where is the justice in high pay and bonuses for senior employees in state aided concerns, when that aid has to be paid for by people with far less income than these executives?
I believe in good pay and bonuses for success. I would have no issue with bonuses accruing to good performers within state aided banks, if they were only to be paid these bonuses in cash if and when we the taxpayers have got all our money back with a profit.
The current bank defence to high pay is that most of this relates to investment banking divisions which are profitable. In that case, sell them off, so they flourish in the private sector. There they can pay what they like, as long as they do not come back to the taxpayer for any support. If these state owned banks sold their investment banking divisions it would produce a good capital receipt, which would then allow these banks to pay a special dividend to taxpayers, or return capital to taxpayers.
Whilst they are about it they should do the same with overseas banks in their groups. Why on earth did British taxpayers have to bail out investment and foreign banks in the first place, instead of lending them money short term as lender of last resort if needed and helping them find a market solution? Why do we go on owning them, when we need our money back and they are profitable?
The state aided banks are behaving like typical old nationalised industries. They get taxpayer support, they make large losses overall, and they put up their costs and pay because they do not have to take the tough action any private sector business would have to take in their loss making position. That’s why so many people are angry about what is going on.