Leader: Bank bonus 'leakage' is not the problem

Royal Bank of Scotland chief executive Stephen Hester chose the word carefully in order to avoid being factually inaccurate, but attempting not to spark another wave of damaging headlines for his beleaguered institution.

He told MPs on the Treasury select committee yesterday there could have been "leakage" into the bonus pool which is paid to the senior executives from billions of pounds of support put into RBS by the government at the height of the banking collapse.

No matter how subtly this was expressed it is now clear taxpayers have contributed to the nearly 1 billion bonus payments made to bankers at RBS, among them Mr Hester who will take home nearly 7 million this year.

There will be those who are scandalised by this. Taxpayers' money was not meant to be used to pay bonuses, but to ensure ordinary people's mortgages would continue and their bank accounts remained open. Realistically, however, some "leakage" was inevitable.

What is a scandal is that RBS's remuneration committee seem to think these large bonuses are justified, on the basis that if they were not paid, they would lose their most talented staff. It is a claim which does not bear scrutiny.

Are there that many other high paid jobs in the industry these people would leave for? We think not. Are those bankers below the most senior executives incapable of moving up into more responsible positions if there were vacancies? We doubt it. The level of bonuses, not the payment of them or even where the money comes from, that is the problem.