Bonus has become a dirty word, certainly when mentioned in the same breath as banks and in the earshot of some Labour MPs.
Last night Lloyds TSB met around 20 Parliamentarians over dinner (arranged many months previously) to share its views on the state of financial services sectors, especially mortgages, pensions and small business banking.
Inevitably, the news that chief executive Eric Daniels had on Monday reassured staff that their bonuses would be paid came up.
Lloyds TSB explained patiently that this internal announcement had been aimed at call centre, branch and back office staff on relatively low salaries who have an element of performance-related pay or who have reasonable expectation of receiving some very modest bonuses based on reaching certain targets, even though they do not, strictly speaking, have performance-related pay deals.
To me the shocking fact was not that these people were going to be paid bonuses of a few hundred pounds, but that the basic salaries quoted for some of the people covered by the announcement were as low as £11,000, with £15,000 apparently being a fairly typical figure.
You might have expected the more left wing Labour MPs and Labour peers with strong trade union connections to have been shocked by the base level salaries Lloyds TSB pays – but not a peep on that front. They remained angry at the thought that anyone working for a bank in the current climate might qualify for a bonus.
You could sense the resigned exasperation among the Lloyds TSB management at the dinner at the realisation that this was an argument that they simply couldn’t win despite the more understanding noises made by the Tories around the table.
This argument has to be put into the context of the very low esteem in which the banks are held at the moment.
Recent opinion polls have suggested that the overwhelming majority of ordinary citizens on both sides of the Atlantic lay the blame for the recent financial turmoil and our present economic woes firmly at the door of the banks. They want them punished and hackles rise from Detriot to Durham at the suggestion that any bonuses should be paid.
This crude, knee-jerk reaction is understandable. To carry it through to wanting to punish low paid bank staff as far removed as my paper boy from the decisions that nearly brought the entire global banking system to it knees defies reasonable commonsense.
This is not the fat cats of Wall Street trying to maintain their luxury lifestyles by paying themselves huge discretionary bonuses, as revealed over the weekend. I am all for showing those at the top of financial institutions that gambled their fortunes and our future well-being the way to the dole queues without a penny of compensation.
They should have known what they were doing and shouldn’t be surprised if they have to carry the can for corporate incompetence on an unprecedented scale.
Many of their staff will have to share the pain anyway as banks struggle to cut their cost base, without denying them a few hundred pounds extra in their wage packets at Christmas. That would just be spiteful.
For other blogs written by David Worsfold, click here.IFAonline
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