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An article relating to this blog post on Finextra:

RBS to cut 2300 UK back office jobs

Royal Bank of Scotland is to cut 2300 jobs from across its back office operations in the UK as it scales back its business in response to the ongoing financial crisis.


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Bonuses! You got to be kidding

The news channels have all been carrying the enquiry into the banking crisis and of course been heavy laden with the grovelling apologies of the boardroom architects of the disaster. These apologies clearly written by their PR and delivered with hardly a look of remorse by those responsible are obviously totally inadequate. What was required was a unanimous climb-down by all bankers agreeing that no bonuses of any kind will be paid until the banks are out of hock to the tax payer. Nothing less would be honourable and nothing less worthy to those that have bailed them out of their still expensive life style.

Perversely it is not the boardroom that is bearing the brunt of their folly and ineptitude but their hard working employees in the back office and those at the counter and the many associated smaller firms and their employees caught in this debacle and of course this spreads far and wide with everyone in the UK badly affected in some degree and of course has had global impacts as well.

After the tax payer bailouts of the banks any existing employee contracts should be null and void and all contracts should be renegotiated reflecting the new condition of the bank. After all if the banks had not been bailed out there would have been no jobs. How can companies justify paying out bonuses to some employees whilst making whole swathes of others redundant.

I am not against the bonus culture and have benefited from this during my career in the City but there is a big difference between bonuses in my day to those of today. In my day people were paid a lower basic and big bonuses were a reward from the profits of the company. If the company did really well all employees enjoyed a good bonus but if not little or no bonus was paid, even if we had worked our hardest and performed our best during a bad year and this was accepted.

Today, we find bonuses being paid regardless, it seems of performance or the Company's financial status, in order to prevent the star performers and in many case's not such stars, seeking employment with one of their rivals. It's a kind of football star mentality that the boardrooms have been seduced with.

It's for this reason the compensation culture in the City has totally failed and why those in the boardroom are entirely culpable and should be penalised for failing in their duties as Directors. Give them bonuses you have got to be kidding; they are lucky they are not in jail.   

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Comments: (2)

A Finextra member
A Finextra member 16 February, 2009, 09:48Be the first to give this comment the thumbs up 0 likes

I absolutely endorse this view. 

Our Court system deals with offences from turning left at red signals to assaults, and serious crimes heard and referred to Crown court for trial and sentence.  Indeed, for momentary lapses of concentration when driving,  fines plus costs will be a minimum of around £100 ( plus 3 points)

But for our beleaguered Banking industry, there seems to be a blisssful immunity from everyday reality. Billions lost, expensive parties, the responsible identified (contrite but claiming lack of knowledge) , yet NO action. 

Rewards for failure, the culture of bonus without responsibility and blatent boardroom incompetance should not be allowed to smear the work, dedication and loyalty being shown by so many in the affected institutions.

In our growing litigious society, ignorance is no defense, and the banks should mirror the model of the legal companies .. no win no fee. 

 

 

 

A Finextra member
A Finextra member 16 February, 2009, 11:39Be the first to give this comment the thumbs up 0 likes

Thanks for your comment Graham

I am reluctant to go down the route of laws against exesive remuneration and hope that Banks could be brought into line with greater shareholder involvment. However it appears that Banks are refusing to acknowladge their responsibility and faults so perhaps the stick needs to be taken out of the cupboard!

Gary