It IS hard sometimes not to be staggered by the sums of money some bankers are paid. I completely understand that for many people, these sums seem utterly divorced from the world the rest of us live in.
But before we give in to demands to further cap bankers’ pay, we need to think through the consequences. Something certainly needed to change – the pay of some bankers had become grotesque. But a huge amount of change has taken place.
Bankers’ bonuses have fallen by 85 per cent since the financial crisis.
A series of reforms has ensured that bankers now take at least half of their bonuses in shares – some of which they are not entitled to cash in for a number of years.
They are now rewarded for making decisions in the best interests of the banks, their customers and the wider economy – not for short-term gambles.
More change is on the way. The European Union is introducing a rule that means that no banker whose decision could imperil their bank will be able to receive a bonus larger than their annual salary or in some cases, if shareholders agree, twice their salary.
Isn’t that more than enough? It is important to remember that this is a hugely competitive marketplace.
Footballers are in a global marketplace and if their club does not pay them enough they can move leagues or out of Scotland. Similarly, bankers can easily set up operations in New York, Hong Kong or Singapore where there are no such restrictions on pay.
The few thousand people we are talking about are the leaders in the banks in this country. If the American boss of a large business which is based in London decides he really does not want the new rules to limit his bonus, he can move back to Wall Street.
That could lead to all the people that work for him relocating away from London. This would mean we collect less tax from them and they are not spending their large bonuses in our shops.
The UK is a world leader in banking and it is our biggest export industry. The money the industry generates pays for schools and NHS salaries and it also keeps the pound competitive, ensuring that we can still afford to buy goods manufactured overseas.
Some star bankers, like footballers or lawyers, are paid extraordinary sums. But before we demand that their pay is capped, we need to remember that their exodus would leave us all poorer.
• Anthony Browne is chief executive of the British Bankers’ Association.