The popular sport of 'bashing bankers', such a ubiquitous feature of global discourse over the last few years, is gearing up for a fresh season. The prize catch this year is Stephen Hester, Chief Executive of the troubled Royal Bank of Scotland, who waived his share-bonus valued at £963,000 after coming under a bruising barrage of public vitriol and political point-scoring.
RBS is 82% owned by the UK taxpayer after a multi-billion pound recapitalisation from the Treasury at the height of the financial crisis. We all have an interest in seeing RBS return to sustained profitability as soon as possible so that our money can be paid back, hopefully with interest. The opprobrium being shovelled onto Mr. Hester - who, it should be remembered, did not create the mess at RBS but was brought in to tidy it up - risks undermining that interest.
It was a mistake in the first place for the RBS remuneration board to offer Mr. Hester any bonus, not because he didn't deserve it but because, short of a token amount, it was always going to be politically explosive. In turning it down he made the only viable decision available to him; the alternative would have been to hire the same security company employed by his predecessor, Sir Fred Goodwin, and quickly acquire a taste for the sand in which his head would be rapidly buried.
The decision to turn down the bonus is purely symbolic. It will have negligible bearing on RBS's profit margins and there will be many others at RBS earning larger bonuses this year but because they are buried in anonymity on the trading floor we can't rack them in medieval stocks and throw rotten tomatoes at them.
The problem here is not the bonus. If a public limited company wants to award its chief executives with obscene bonuses, that is entirely their prerogative. If they don't have the money, they will quickly go bankrupt. If enough of their shareholders are unhappy with their decisions, they will quickly be voted down. The issue with RBS is having the government as the majority shareholder. Any question of bonuses, therefore, cannot be divorced from popular public sentiment, currently hostile to capitalism's monetary excesses.
It would be unsurprising if Mr. Hester felt bruised by the venom we were quick to spit on him for having the audacity to be a banker. There will certainly be opportunities for him at other banks, less in the spotlight. Good riddance, many would say, if he chose to leave. If he can't be satisfied with a base salary of £1.2m then maybe we don't want him running a state-owned asset in the public good. True, there are others that could do his job but who would want to? No-one volunteers to be Public Enemy No.1 and few would welcome taking on a role where they were subject to periodic interference from government who in turn were responding to the public whim.
The government either has to break RBS up and sell the whole thing on or establish a framework whereby the chief executive agrees to accept a nominal bonus until the bank is out of public ownership. The latter choice will reduce the pool of interested applicants but that is no different from where we are now after this bonus debacle and it would avoid the annual spasm of counter-productive banker bashing.