Answering a question with a question is never satisfactory. But in the case of the City, it seems entirely appropriate. The question is: have banks changed their attitude since the crash of 2008? To which the answer must be: do leopards change their spots?
The simple truth is there has been no significant altering of financial institutions’ approaches towards pay. The all-pervading sense of entitlement is as strong as it ever was. Public sector workers may be forced to endure wage freezes; much of Britain might be living in straitened times; but in the City, the gravy train keeps rolling along.
True, the wheels may be slowing – shortly, the EU has decreed, bonuses will be capped at 50 per cent of salary, or 100 per cent with shareholder approval. But anyone supposing that the banks, mindful of an EU diktat and the prevailing public mood, would curb their mega-payouts can think again. Far from resembling a hair-shirt philosophy, the atmosphere in the Square Mile ahead of this year’s bonus days is almost one of defiance.
If this really was the end for the seven-figure payment to someone, who, after all, has merely been doing their job, then we could let it pass. Soon enough, the giant bonus would be consigned to a history littered with wild risk-taking, cynical wheezes and financial disaster. But so entrenched is bankers’ belief that they really are special, that they really do deserve an earnings structure wholly out of kilter with the rest of society, the chances of calling time on the bonanza are looking slim, particularly if this year is any guide. As we report today, the top performers can expect bonuses as much as 15 per cent higher this year than last.
Nor will this be the last hurrah in the face of encroaching officialdom. Right now, there will be folk in the City drawing up clever ways of ensuring the bumper pay day remains. Perhaps base salaries will soar so the EU’s bonus restriction will apply to a much larger number. Perhaps some other tactic will be found.
And yet, whatever the banks may claim, there is no justification for these awards. The recipients did not do anything exceptional; they only did what was expected of them by their employer and by their clients. Worse, bonuses are often rewards for high-risk behaviour that, en masse, can threaten the stability of the economy.
The argument that this year that those pocketing the eye-watering amounts are fewer, and that many bank workers have received a “doughnut” of a bonus – that is to say, nothing extra at all – does not wash. The fact is the banks are still paying staff members the sort of sums that most working people can only dream of. What is more, bankers expect to be paid those sums.
It is that sense of entitlement that must change. Bankers see themselves as bigger, smarter, more important than their clients and pay themselves accordingly. Despite the catastrophe of a global financial crisis caused, in no small part, by their recklessness, they still believe themselves Masters of the Universe. If there is to be progress, balance must be restored; that means bankers become servants again, and reduce their earnings accordingly.