Banker's bonuses are still dominating the news during the results season. The banks one by one, will all declare massive profits that are virtually the same as before the banking crisis. "Crisis what crisis" is the cry in the boardrooms and they're right.
In just a few short years the banks that crippled many of the worlds economies are back to where they started, whilst everyone else has to struggle to recover and we may be as much as a decade away from getting back to 2007 levels.
As the banks declare this year's bonuses they are all trying to show their reluctance attempting to curry political favour by announcing that bonuses are so many percentages down on previous levels. That's all well and good, except previous levels were out
of this world.
A banking executive even said at a Government enquiry that it's about time the banks were allowed to be relieved of attack and everything reverted back to pre-crisis times. Glad that they recognised that there was a crisis.
The Government is trying to do something about the power of the banks with the banking levy for this year. Now raised by £800m to £2.5b but quite frankly this is just a drop in the banking profit ocean when one bank alone announces £6.5b in profits. The
Government levy is irksome and an irritant to the banks and actually does very little in denting the budget deficit, repairing tax payers confidence or building a harmonious relationship with the banks. They should have clobbered the banks with an individual
20% tax on profits or not bothered. An extra £30b into the Government coffers really would have made some impact and may have limited the cuts and enabled better economic growth prospects.
One thing that is really surprising in today's austere times is the lack of shareholder influence on the banks remuneration policies and dividend amounts. Why are the pension funds and leading investing intuitions accepting that more is being paid out in
higher remunerations than in dividends? Is this not robbing the Institutions and the tax payer and a failure of their duty as custodians of their investors and customers?
Surely the best method in a democratic, capitalist society is for Shareholders to pressure Boards at the AGM to present more acceptable remuneration and dividend amounts. Investing Institutions have the power to remove Board Directors or even complete Boards,
if they are not servicing the needs of the company and the shareholders. Of course the board could all resign and hope to move to another bank but if this was an industry initiative, this would leave no bank outside of its scope and thus no place to run too.
The Government should be asking in a public enquiry why investing Institutions are not fulfilling their responsibilities. This would be a miles better approach than taxing banks and the strange thing is that our democratic financial markets are structured
to deal with this problem. So why is it not being done?