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What should bankers be paid?

As bankers’ pay + bonuses + long-term incentive schemes + share options + pension largesse begins to head north again as though the biggest financial/economic crash caused by them hadn’t happened and as City bonuses rise above £4bn this year, what does the public believe that bankers should be paid? Remarkably, nobody seems to have asked them. Certainly not the government which is far more concerned whether unemployed persons on job seekers allowance deserve their £71 a week ‘handout’.

It might come as some surprise to members of the public – and perhaps even to ministers – that there were 2,436 bankers in the City in 2011 paid a minimum of €1 million a year, that is a minimum of £16,025 a week, or to put it another way at least 271 times what someone on job seekers allowance gets. Of course a banker should be paid more than someone who is jobless, but 225 times? Or in the case of the top banking elite 1,000 times more?

As it happens, the European Bankers Association has very helpfully published earlier this month some statistics which illustrate all too clearly the excesses of the UK banking class. Despite costing the UK taxpayers £68bn in direct bailouts plus a further £1.2 trillion in UK indebtedness, these 2,400 bankers got at least £833,000 a year, and are probably getting rather more now.

Altogether there were 3,166 bankers at this level in the 9 biggest EU countries, in other words as many as 77% of them were in Britain. For comparison’s sake Germany had 170, France 162, Spain 125, Italy 96, Netherlands 36, Denmark 33, Ireland 21 and Sweden 15. One might wonder why there were 14 times more € millionaire bankers in the UK than in Germany or 15 times more than in France.

What will the UK government do about this since we’re all supposed to be in this austerity together? Nothing, not unrelated to the fact that the Tory party gets half its donated income every year from their friends, the bankers, including £25bn last year from hedge funds. However, help is at hand from pershaps an unlikely source. New EU rules are setting a limit on financial sector pay in cases where State aid has been given to failing banks.

In the UK’s case this means that RBS and Lloyds bank executives will, as from next month, get no more than 15 times the national average salary or 10 times the wages of the average bank employee. As the UK national average salary is now calculated at £31,413, this means that the chief executives (and other boardroom members) of these two banks will have their total pay, including bonuses and share awards, capped at £471,000 – which might still seem (and is) enormous, but is only a tenth of what the market currently doles out. So in terms of reining in greedy bankers, it’s Brussels 5, London 0f.

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