Terry Murden: Money talks for government when it comes to bank bonuses

AFTER the public vitriol of recent weeks it looks as though a truce of sorts is being called between Westminster and the banking sector. Prime Minister David Cameron appears to have acknowledged that only so much punishment can be handed out before rebuke turns to permanent damage.

Public anger over bonuses has been well-stated and there has been some success in having them reduced, more closely aligned with performance and paid out in shares rather than cash.

That said, bonuses will continue to be paid, and on a scale that bewilders the ordinary salaried worker. Royal Bank of Scotland is expected to allocate between £400 million and £500m to its bonus pool while Barclays boss Bob Diamond can expect a payout of up to £3.4m.

But Cameron, taking a hint from his Chancellor George Osborne and prominent figures in the City, has decided that continuing to apply pressure on bankers to relinquish big payments risks stoking up an anti-business culture (an issue raised here last week). He has clearly decided that there is little more to be gained from merely trading blows with Labour leader Ed Miliband over who can be the toughest bank basher in the playground.

In the end, money talks for the government as well as for bank bosses and the plus side of big bonuses is big tax payments. To that end the Trades’ Union Congress last week called for the scrapping of corporation tax relief on bankers’ pay and bonus to raise another £1.7 billion.

But as the mood in government becomes more conciliatory, it is unlikely that the Chancellor will be persuaded to impose further taxes, however tempting that may be.

McGrigors ‘merger’ is a mixed bag

THE merger of Scottish law firm McGrigors with its bigger rival Pinsent Masons will see the disappearance of a 200-year-old name, symbolising the shifting sands of the legal sector.

Law firms north of the Border have been struggling for work and several have laid off workers.

The situation has been made worse by the changes in the wider corporate scene as head office decisions have moved out of Scotland.

These days the lawyers are less likely to rub shoulders at the New Club with the chief executives of the banks, insurance companies and other corporates. McGrigors has been seeking a merger partner for some time and other big practices are said to be considering a similar option.

Some question the rationale behind McGrigors and Pinsent fattening up its UK operations when the global market is the big goal for both firms. Others argue it opens up huge opportunities for staff at McGrigors, which was already building an overseas presence.

The merger, however, is in reality a takeover so the Scottish firm has done well to ensure there is at least one partner – Richard Masters – on the new board. Senior partner Kirk Murdoch will have to settle for a non-executive role, though I’m hearing he will become Scottish chairman.

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