Editorial: Governments should not own banks

Share
Related Topics

Another year, another highly politicised row about bonuses at state-owned Royal Bank of Scotland. Nor is 2013 looking any less controversial than 2012. The institution bailed out to the tune of £45bn four years ago, and expected to report yet more losses next week, is all set to hand out an extra £250m to its staff.

That the Treasury is drawing up plans either to sell off the government stake, or to give it away to taxpayers, is therefore to be welcomed. Indeed, with this year's jamboree set to be even more jarring for taxpayers – in the light of the £390m fine for Libor-rigging levied this month – the case for a swift exit is stronger than ever. The Chancellor may have dodged the most obvious flak by specifying that the Libor penalty must be met by bank staff. But the stink over excess pay continues nonetheless, and the £800,000 bonus due to chief executive Stephen Hester is the subject of particularly impassioned debate. Yet George Osborne's options are limited. Simply slashing pay risks the recovery we, as shareholders, so desperately need. Here, in fact, is the nub: government ownership of a bank is fraught with tensions which cannot be resolved.

As such, the arrangement is best terminated. It will hurt the Exchequer, of course. Initial hopes of a profit from the rescue were swiftly punctured. And although the share price has shot up by more than a third in the past 12 months, there is another 40 per cent-plus to go before the state breaks even.

No matter. Better to cut RBS loose at a cost than to continue in attempts to reconcile the irreconcilable. The Chancellor will want to wait until the run-up to the 2015 election to put his plans into action. So blatant a piece of political bribery only emphasises the need to get the Government out of banking as soon as may be. The state should be gone from RBS before the next bonus season.

React Now

Latest stories from i100
iJobs Job Widget
iJobs General

Ashdown Group: Senior Accounts Assistant - Accounts Payable - St. Albans

£26000 - £28000 per annum + benefits : Ashdown Group: Senior Accounts Assistan...

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Recruitment Genius: Installation and Service / Security Engineer

£22000 - £40000 per annum: Recruitment Genius: This company is part of a Group...

Recruitment Genius: Service Charge Accounts Assistant

£16000 - £18000 per annum: Recruitment Genius: Are you a a young, dynamic pers...

Day In a Page

Read Next
A Gold Ferrari sits outside Chanel on Sloane Street  

Sunday Times Rich List: We are no longer in thrall to very rich people

Terence Blacker
David Cameron was openly emotional at the prospect of Scotland leaving the union before the referendum  

Remember when David Cameron almost cried over Scotland because he loved it so much?

Matthew Norman
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions