Blankety Bank

So the Royal Bank of Scotland are about to pay out £576 million in bonuses while nursing a loss of 8.2 Billion pounds. This has really caused a lot of heated debate and I will try to be non biased as I usually try to be. 

They have made a profit of more than 2 Billion pounds but due to bad debt, fines for dodgy bank issues and poor governance in the past they have had to write off a great deal of money. 

Lets put to one side that they are a bank because that will just wind us all up, and Barclays and now RBS realise that estate agents are more trusted than them and that's fatal when you deal in peoples money where they have to trust you. Lets instead look at them as a normal global business that has contracts with employees at all levels where they pay bonuses if their department or bit of individual work beats expectations. 

We tend to focus on the big fund managers who get paid by beating bench marks instead of looking at the majority of their staff who are branch managers, counter staff etc. They work hard under great pressure and earn far less than you can imagine; I understand that the average bank manager will be paid around £25 to £30k depending on the branch size and will be reliant on a bonus to improve their lives a bit. I know a bank manager from a different bank and they have made it very difficult for him to get a bonus at all and they have not increased his pay.

This was the same bank manager who was a simple bank clerk working in Hull was confronted with an armed robber who crashed in to the branch and shoved a pistol to his face. He didn't notice the gun for a while as he was talking to poor old me who out of the office and in the banking hall (yes I worked for a bank that is now defunct). I nodded vigorously towards the man with the gun and he continued to talk about his day, finally he noticed and pulled back in horror as he saw the gun! He handed the money over from all the tills and in to the assailants bag who then bolted out of the door. Now do you think he deserved a bonus that day?

I will blog about that armed robbery in detail another day because I know you will want to know all sorts of things about what happened afterwards.

I think the banks need to pay the normal staff a higher wage to start with a do away with bonuses and this will remove public ire and improve the lives of their staff. This has happened in Financial Adviser businesses because the regulator has made it so. Now they are paying the sort of wages that the advisers are worth but without the bonuses added and so the pressure has been relaxed to just sell a product and now Financial Advisers are free to look at their clients finances as a whole rather than just looking for a commission driven product that will fit. 

In conclusion don't mix up the real people at the banks with the very small number of top executives, most of the bonuses will go to thousands of the staff who they should have paid a better wage to in the first place. You may in the future see the fixed cost wage bill increase and fewer bonuses and that will be a good thing.