But there is what the analysts like to call ‘underlying’ good news: people are largely managing to pay off their loans (even the high risk ones which probably shouldn’t have been approved in the first place), and mortgage business is on the rise. The Government may be able to think seriously about selling it off in order to recoup the £28bn of taxpayers money tied up in it. And there’s a bonus pot of £13.1m to be shared amongst the 4,500 staff – who with an average salary of £25,000, are not financial fatcats, for once.
Meanwhile, RBS, another state-owned bank, has just announced its bonus packages, and there’s a good chance many won’t be so impressed. The top executives at the bank are due to share £9.6m, and will have the chance to earn a total of £18.4m under RBS’ long-term incentive plan. CEO Stephen Hester is the one who stands to make the most, with a £2m bonus on top of his £1.2m salary, and another £4.5m available under the LTIP.
Doubtless the green ink brigade will have a thing or two to say about Hester’s dosh, which must make him one of the highest paid public servants around. It’s also tricky for the government to deal with big bonuses in its own back yard whilst simultaneously trying to put the brakes on the wider banking world’s paycheques.
But there’s the rub of course – we all want to maximise the chances of disposing of RBS (and the Rock) for a good price as quickly as possible. Such sales could make the national finances look a lot healthier at a stroke. And the RBS deal should help to do that: to begin with, all the bonuses will be paid in shares, which no-one will be able to sell off until March 2014 (so if the share price drops before then, so will their bonuses). And while Hester’s package indisputably adds up to a lot of money, it’s still a fair bit less than Barclays CEO Bob Diamond, who was awarded £9m last week. So perhaps they are making a decent job of walking the tightrope.
Back over at the Rock, the bank has admitted that its retail deposits have dropped from £19.5bn to £16.7bn. Mortgages, though, have risen by 18% to £12.2bn, and are likely to rise even more: the bank caused something of a storm last month when it started offering 90% mortgages once again. Critics have pointed out that that’s exactly what got it into this mess in the first place.
According to Sandler, the Government is currently readying Northern Rock plc for a sell-off: earlier this year, it put out a tender for advisers to help look at options for the business.
So with RBS and Northern Rock to worry about, it’s no wonder that our great leaders seem to blow hot and cold over banking reform – they don’t want to kill the goose that could lay them a couple of very tasty golden eggs over the next year or so…