Last autumn, I asked whether bonus capping would damage the state-owned banks, as their senior executives claimed it would at the time. RBS boss Stephen Hester is convinced that it has. He claims he could have made an extra £1 billion for RBS if he had been allowed to pay the bonuses he wanted and keep a thousand of his best people from leaving. I’m somewhat sceptical about this claim, especially after having a beer with a City-based RBS chap who said he had not noticed 1,000 people walking out last year, let alone 1,000 good ones.
But, in a less widely reported story, another bank which announced a catastrophic loss last week said that it would be paying no bonuses at all. Despite this, the head of Commerzbank’s Corporates and Markets division said that the bank was still able to attract and retain talent.
So if Commerzbank can manage to avoid paying bonuses for a performance that almost wiped the bank out, how come RBS can’t do the same?
Hat Tip: Edward Harrison.