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British Bank chief gives back million pound bonus

Stephen Hester, CEO of Royal Bank of Scotland, bows to public pressure
HesterEnlarge
Stephen Hester, ceo of Royal Bank of Scotland (FACUNDO ARRIZABALAGA/AFP/Getty Images)

When a banker gives back a seven-figure bonus that's news. Of course, there is a story attached.

Stephen Hester, is head of RBS, Britain's largest bank and epicenter of the banking crisis in 2008. The British government bailed out the ultimate too big to fail institution and that means the British taxpayer owns 83 percent of the bank.

Hester was recruited by the government of Labour's Gordon Brown to run the bank after the previous management was forced out as the price of the rescue. He took a paycut to try and turn the bank around. He has by all accounts done a reasonable job.

But to wipe debt off the bank's books he has had to shed staff. I blogged about the latest cuts last week.

Anyway, he was entitled to a share package this year worth around £1 million ($1.56 million) not a great deal by the standards of JP Morgan's Jamie Dimon or Barclay's Bob Diamond, but a politically impossible situation given how much of the bank is owned by the government.

A week's worth of fulmination in the press has led to the inevitable: Hester announced he would not take the bonus. There was relief across the political spectrum. The Conservative Chancellor of the Exchequer, George Osborne, praised Hester's "sensible and welcome decision."

Since this is a political as much as an economic story, you might want to read the analysis of veteran Guardian political commentator Michael White. Here's a taste:

"The cult of the Superman CEO is a problem – those soaring pay ratios – in Britain and the US, more than in rival economies I think. It's got out of hand and it's wrong. Slowly, painfully, we are collectively doing something about it. Call it stone-throwing populism if you like, but populist responses are not always wrong and sometimes save out-of-touch elites from something nastier than a pay cut."

http://www.globalpost.com/dispatches/globalpost-blogs/europa/british-bank-chief-gives-back-million-pound-bonus

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