Is encapsulated by Sir Philip Hampton, the chairman of RBS, who thinks that Stephen Hester should still get his bonus, despite presiding over the criminal activity involved in Libor fixing. Stephen Hester thinks so too. He should be thinking he is lucky he is still in a job. But, despite the RBS being one of the banks that put us in the economic position we are now, despite it having to be rescued by the taxpayer - that's you and me - despite it still, four years on, being 81% owned by the taxpayer, bankers haven't changed a bit. The culture is still the same: salaries as big as possible, bonuses as big as possible, responsibility as little as possible, screw the customers, the taxpayer will pick up the bill.
Hester's justification is that his performance should be looked at in the round - his success at making RBS stable over the last four years. And Hampton says Hester's basic salary is modest by comparison with others in the banking sector. (All that says is that other bankers are even more brazen than Hester.) For a start, I don't accept that logic. When something as massive as Libor fixing happens, it doesn't matter how good the boss is. Either the boss knew nothing, in which case he is singularly stupid, or he knew something, in which case he must pay the price. But the banking world still does not work by the same logic as the rest of the world. Hester must be paid. Apparently because of the job he has done to keep RBS afloat. I suggest that his performance over the last four years has been nothing out of the ordinary. RBS is, and was, a decent bank. It had all the structures and the expertise in place, it had a very good customer base, and it was and is working in a market that is not all that competitive for big banks. All he had to do was simple things - readjust the balance sheet, make sure people didn't take such stupid risks, fire people who had done wrong (failed on that one). It does not take a genius to do these things. Any competent manager could have done that. Some of the management students I am teaching at the moment could have done that. Judged by that standard, Hester would struggle to justify his £1.2 million salary, let alone his bonus. But Hester is not judged by that standard. That is what is wrong with banking.
Hester's justification is that his performance should be looked at in the round - his success at making RBS stable over the last four years. And Hampton says Hester's basic salary is modest by comparison with others in the banking sector. (All that says is that other bankers are even more brazen than Hester.) For a start, I don't accept that logic. When something as massive as Libor fixing happens, it doesn't matter how good the boss is. Either the boss knew nothing, in which case he is singularly stupid, or he knew something, in which case he must pay the price. But the banking world still does not work by the same logic as the rest of the world. Hester must be paid. Apparently because of the job he has done to keep RBS afloat. I suggest that his performance over the last four years has been nothing out of the ordinary. RBS is, and was, a decent bank. It had all the structures and the expertise in place, it had a very good customer base, and it was and is working in a market that is not all that competitive for big banks. All he had to do was simple things - readjust the balance sheet, make sure people didn't take such stupid risks, fire people who had done wrong (failed on that one). It does not take a genius to do these things. Any competent manager could have done that. Some of the management students I am teaching at the moment could have done that. Judged by that standard, Hester would struggle to justify his £1.2 million salary, let alone his bonus. But Hester is not judged by that standard. That is what is wrong with banking.
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