This column has regularly noted that attempting to stem the flow of vast sums into a small number of pockets was on a hiding to nothing.
The European Commission last week at least moved towards a decision to introduce a cap on bonuses, but it is fraught with difficulties. A cap could merely encourage banks to raise salaries and its implementation would create competitive disadvantages between those to whom it applied and those that were not within its grasp.
George Osborne, the Chancellor, was a sole opponent, claiming he was supporting the City of London which fears it will be the big loser. It is also a sign that he is on the side of the bankers, or that he has merely given up any hope of taming them.
Friday’s announcements on remuneration from Barclays and Royal Bank of Scotland, following a similar report from HSBC, revealed that collectively they paid 727 staff more than £1 million each. The numbers receiving awards is down on the previous year, but the bigger question is whether bonuses should be paid at all when the public has been horrified by a series of mis-selling and rate-rigging scandals.
Furthermore, when the banks are urged to lend more to businesses they squeal about the need to conserve funds in order to strengthen their balance sheets. This looks a little hollow when they can find millions to pay themselves.
The bonus culture will never be eradicated; indeed, it should be retained to encourage improved performance. But a £5.2bn loss, as RBS suffered, does not look much like an improvement.
Wood deserves £200m payday
When it comes to big pay days, few will beat Peter Wood this year, who is in line for between £130 million and £200m when insurance company esure floats this month.
The company, which owns Go Compare and Sheilas’ Wheels, will be valued at up to £1.3 billion, providing Wood with a second fortune after he cashed in his other big creation, Direct Line. It’s also a rare thing for an entrepreneur to repeat his earlier trick, but anyone who puts him in the fatcat category is missing the point. Wood has created thousands of jobs and his businesses pump vast sums into the economy and the Exchequer.
His success will attract investors, ensuring the flotation goes well and giving a further push to a renewed interest in share issues.
Tough times for Morrisons boss
It is a big week for Dalton Philips, the man who took over the top job at Morrisons when Marc Bolland left to join Marks & Spencer.
Philips is playing catch-up with his supermarket rivals, having seen trading slip and disgruntled investors line up to predict his downfall unless he turns things round quickly.
An online food strategy is top of the bill alongside a roll-out of more convenience stores to compete with Tesco and Sainsbury’s, who have benefited from a return to town centres.
Philips will have to explain a fall in profits, partly a result of a poor Christmas. He will also need a strategy that shows how he can win back customers from a revitalised Tesco and from the upstart discount chains Aldi and Lidl which have been snapping at the heels of the big four.
He will need to be careful, however. Some shoppers have criticised some of the new formats and product lines for representing too much change. He has hired talent show hosts Ant and Dec to front a TV advertising campaign, but he will need to show he’s got the star quality to get the shopper’s vote.
Reunited Cairn on the agenda
AS IF Cairn Energy’s sale of a stake in Cairn India was not difficult enough, there is now talk that its offspring could be about to launch a bid for the Edinburgh company.
Cairn floated the Indian business in 2007 and two years later sold a controlling stake to Vedanta Resources after a protracted process with the authorities.
Investors are now concerned at Cairn India’s reliance on the Rajasthan oilfield and whether Vedanta is committed to investment in oil and gas. Reuniting Cairn is now on the agenda.