Pressure increases on RBS to give up bonuses

As it was reported that some bankers could receive bonuses worth £15 million this winter with hundreds of the payouts expected to go to RBS, John Prescott’s website Go Fourth has relaunched its ‘Give Up the Bonus‘ campaign.

The main page of the website says:

“In February the Royal Bank of Scotland (RBS), which received £20 billion of taxpayers’ money, tried to pay out £1b of it in bonuses to bankers and traders. We believed this was morally and economically outrageous and had to be stopped. Thanks to 30,000 people signing our Give Up The Bonus petition, RBS reduced the payout from £1b to £175m. Now RBS reportedly wants to pay a total of £1.5bn in bonuses to investment banking staff, and the board has threatened to quit if the government blocks the move.”

The chart below from the House of Commons ‘Economic Update – October 2009‘ (p.8) shows that for much of 2009, wage increases have been accelerating only because bonuses have been increasing. The thicker black line which excludes bonus payments shows that wage increases have been decelerating. This pattern is unusual since the two lines normally move in the same direction.

Financial economist and Left Foot Forward contributor, Duncan Weldon, outlined on his economic blog yesterday that RBS are employees have not even put in a good performance this year with a return on total assets worth £464.6 bn of just 1.35 per cent, well below the return that would have been received had the bank bought “simple, risk free 10 year UK government bonds”