The HSBC have just announced an annual profit of £14 billion. As a reward the chief executive of HSBC, Stuart Gulliver, is to get allowances worth £32,000 a week – on top of his £1.2m salary – to get around the EU’s cap on bonuses.
Not so long ago Barclays bank paid out 10% more in bonuses even though the bank’s profits were down 32%. That represents a bonanza of £2.38bn for Barclays staff in bonuses alone.
What is unique about HSBC is that it’s the first UK bank to reveal how it will sidestep the pay restrictions imposed by Brussels. The new rules restrict bonuses to 200% of salary even with shareholder approval. But you can bet your bottom dollar that the other banks will follow where HSBC has led.
The EU restrictions were placed on all European banks to wrestle back some of the feckless behaviour of bankers who caused the financial crisis by taking reckless and needless risks to win excessive bonuses for themselves.
Back Gulliver, his £1.7m “fixed pay allowance”, paid in shares every three months on top of his salary, will ensure he is paid a minimum of £4.2m a year, up from £2.5m now. Nice little earner if you can get away with it.
The government’s response, yes you’ve guessed it, back the bankers. George Osborne is taking legal action against the Brussels cap.
Oh, well it was always thus, the Conservatives helping the stinking rich. Whatever happened to “we’re all in this together.” They’d rather help banks such as HSBC that were fined £1.2bn in 2012 by the American authorities for money laundering for Mexican drug dealers than ordinary people. Cut benefits, but don’t touch bonuses
But you can’t ignore £14bn profit you can almost hear the government say. Well when a large part of if is a direct benefit from the regime of quantitative easing, the taxpayer can rightly demand that the banks should restrain from lavish payouts to their top brass. After all being handed interest-free state finance to strengthen their balances is hardly them being innovative.
As TUC general secretary, Frances O’Grady, said: “It would be great if banks put the same effort into lending to small businesses and investing in infrastructure as they do to getting round EU rules on boardroom bonuses.”
In a speech a few week’s ago Miliband said inequality was the number one issue in contemporary politics. He’s got a point when the top 1% – or even a top 0.1% – soaring into the stratosphere with their rewards. This latest bonus is a prime example of the rewards that some people get.
It does little good for society to have a forever widening gap between the rich and the rest. It warps the country, it distorts the economy Miliband is right inequality is not good. But the question to him is “What are you going to do about it?”
There should be more than a windfall tax on banks, although that is sorely needed. Rather than reduce taxes for the rich the country should get back to a proper redistributive income tax system. Additionally a proper wealth tax is also needed.
On a score of 0 to 10 how likely is Miliband to enact such measures. If Labour’s past record is any indication, highly unlikely is the answer.