Bonus culture under scrutiny

by Gill Montia

Story link: Bonus culture under scrutiny

The row over bonuses for bank executives continued over the weekend, with Chancellor of the Exchequer, Alistair Darling, announcing an independent inquiry into the operations of banks, aimed at making them function more responsibly.

Risk management will be at the heart of the study, which will take into account whether bonus structures have encouraged excessive risk taking, although the Chancellor has been keen to point out that the Government does not believe banking should be a risk free environment.

Meanwhile, the Leader of the House of Commons, Harriet Harman, is tackling the bonus culture from another angle having announced an inquiry into whether City bonuses discriminate against women.

Apparently, men working in the finance sector are paid over 40% more than the females that make up 50% of the workforce.

Alongside news of the two inquiries come reports that Royal Bank of Scotland (RBS) is proposing to award bonuses totalling £1 billion this year, despite having been taken into 68% public ownership at a cost of £20 billion.

Responding to the reports, Mr Darling has reiterated the stance taken by Prime Minister Gordon Brown and others by proposing that there should be no rewards for failure.

He has also stated that no figure has yet been agreed with the RBS and made mention of certain contractual obligations which could mean that bonuses will have to be paid.