Comment: Bank bonus poser for government. Again

Martin Flanagan
Martin Flanagan
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IT BEGGARS belief we are even having this debate five years after a banking industry with its cover blown tipped the UK into recession and a chronic cost-of-living squeeze for millions of people.

Should Royal Bank of Scotland be allowed to pay its investment bankers a bonus for 2013 that is only equal to their enviable salaries?

Or should RBS be allowed to play the European banking industry’s get-out-of-jail free card on bonus caps (also known as “The Joker” card), and pay staff bonuses worth twice their salaries provided shareholders approve at the AGM? It really double-caps it all.

Labour has thrown the cat among the pigeons by publicly demanding that the UK government – the bank’s majority shareholder – throws out any such request by RBS’s new chief executive, Ross McEwan.

It is undoubtedly a hot potato for George Osborne. If the Chancellor nods through the enriched gravy, the idea that in navigating tough economic times “we are all in this together” risks being seen as risible.

Some believe it is the case already, that the coalition government, even with Lib-Dem bleeding heart shock absorbers, stands up for the wrong people. The well-off do well: witness the last Budget’s cut in the top rate of income tax, and the buttering up of the “grey” pound via apparently ringfenced pension increases and benefits.

Compare this with a squeezed middle class struggling with rising energy and food bills, and a debt-debilitated younger generation.

But, no doubt, if the Chancellor tells the RBS board the double-your-bonus scheme is a non-runner there will be those who argue he risks the bank haemorrhaging talented money-makers to join rival operations.

At such rivals, those disaffected bankers may find more tolerant, or possibly credulous, shareholders and without the complicating factor of part-taxpayer ownership.

Stephen Hester, ousted as McEwan’s predecessor at the RBS helm after effectively making the bank solvent again, may smile wryly given the bonuses unpinned grenade is not his province any more.

McEwan, by stark contrast, has said he wants to put the consumer at the heart of RBS. But the bankers keep getting in the way.

Game for the market flotation fray once more

IT’S a game-changer. The phoenix-like rise from the ashes of administration of the retailer Game could give one of the more improbable plots of one of its Grand Theft Auto products a run for its money.

Eyeing potential oblivion just two years ago, the electronic games group has vaulted back to retail favour under its new owner, turnaround specialist OpCapita.

The launch of new consoles from Microsoft and Sony helped Game nearly double sales over Christmas. Online sales have tripled as its website has been streamlined, and initiatives such as a trade-in offer and reward scheme have gone down well with the thumb-twiddling punters.

Game made £15 million in underlying profits in the year to end-July 2012 and is expected to double that this year.

Such is the group’s resurgence that it is now said to be having a beauty parade of City advisors for a potential £300 million flotation later in 2014.

That is some switchback ride. From staring down the barrel Black Ops-like in 2011, Game, like some of its fictional heroes, has gone from zero to hero.