As ALF Young (Perspective,
2 February) so rightly observed of the banking industry: “Yet more scandal proves that this is a sector out of control and one which requires strong intervention.”
The value of shares in Royal Bank of Scotland, some 80 per cent owned by the taxpayer, has fallen after reports that criminal charges may be brought against it. At best, it will be hit by a fine of £500 million over its part in the Libor rate-rigging scandal and has already set aside £1.7 billion for its mis-sold payment protection insurance.
Then there is the near £200m it paid in damages after last summer’s computer meltdown that caused havoc for millions of NatWest, RBS and Ulster Bank customers. Yet, far from such stupendous incompetence being a source of embarrassment, news is filtering out that the bank is to set aside £250m to pay out in bonuses.
Gordon Brown handed over £500bn to the banks with no control over what happened to it and never has so much taxpayer money been tossed away to so little effect. The late JK Galbraith argued that such bonuses are little more than grand larceny, legitimised by a pretence that they are subject to shareholder, auditor and regulatory oversight.
Performance-related pay is salary by another name. Bonuses should be banned in banks rescued from bankruptcy until such time as state subsidies are repaid in full.
Dr John Cameron
Howard Place, St Andrews, Fife