Banker bonus row heats up between UK and EU

Business banking news review: week ending 7 Mar 2013

Well it finally happened – the EU is taking steps to strip away massive bonuses awarded to bankers, and the UK’s High Street lenders are up in arms in fear.

The new eurozone rules would see anyone working for a personal or business bank account provider having their yearly bonus capped at 100 per cent of their annual salary. Bonuses could go as high as 200 per cent, with shareholder approval, but all the UK banking eggheads have begun to wring their hands at the prospect of having their precious bonuses stripped away – big babies the whole lot of them, if you ask me.

UK banking experts say that instituting the new bonus caps would have a negative effect on economic growth. It would also reduce London’s cachet as a good place to do banking business and could end up sending firms overseas to Ne York or Singapore, according to Boris Johnson, the questionably coiffured Mayor of London.

Mr Johnson showed off his big brain by likening the measure would be just as disastrous as the Roman Empire’s decision to fix grocery prices under Diocletian. Of course, the real rationale behind all the furore from the mouths of British bankers would have to be the fact that they’d have to kiss their massive multi-million pound yearly bonuses good bye and they’ll have to tell their housekeepers to shop at Tesco with the rest of us plebeians.

Truth be told there’s already movement in the UK when it comes to banking bonus reform. In fact, banking giant HSBC has joined the ranks of those looking to move away from sales-linked bonuses and instead put more of an emphasis on customer service, which sounds to me like an effort to rebuild consumer confidence in the wake scandals such as PPI mis-selling and things of that nature.

HSBC staff won’t be earning bonuses based on how many packaged current accounts or credit card offers they manage to convince people to take on any more from this year. Instead, the important metric will be how satisfied their customers are with the bank’s services – so if you’ve ever stood in queue at your local branch only to encounter a staff member that would rather clean the toilet than deal with you, you might be in for a pleasant change; it’s amazing what a brilliant motivator money can be.

Other banks have also followed suit, including Barclays and the Co-operative, who both announced last October that their branch staff will be subject to customer service-based bonuses. No word on whether banking executives will ever be held to the same high standards, but let’s be honest: I wouldn’t hold my breath on that one.

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