Only a total freeze on RBS bonuses will suffice

CENTRAL to the low regard among the public for the leadership of UK banks has been the marked failure of bank boardrooms to respond earlier to the public outrage over bonuses and to manifest a change in the culture of greed that fuelled the worst global banking crisis for 80 years. As a result, the sector is now faced with a Conservative/Liberal Democrat coalition whose minister responsible for business and banking advocates the break up of the "casino" bank model.

Now, at a date and a pace that would leave the description "majestic" looking racy, Royal Bank of Scotland has finally raised the bar for its bonus scheme. The change is itself hardly breathtaking. The share price element is now to be predicated on a share price "base" of 57.8p against 50p previously. For an enhanced bonus payment, the share price would have to rise to 77.5p.

Quite why any bonuses at all should be awarded while the RBS share price remains below 200p – the level at which shareholders were tapped two years ago for 12 billion via a rights issue – is a mystery. The banks have brought public condemnation upon themselves and that is why they face calls for tougher taxation, structural reform and a clampdown on bonuses.

Breaking up the banks is not the way forward. But a firmer regulation is clearly needed. And on RBS bonuses, a total freeze is warranted while the taxpayer remains 84 per cent owner.