The director-general of the UK’s Institute of Directors (IoD) has supported recent criticisms of remuneration levels in the banking sector and said that Britain is suffering from banker’s short term self-interest.
Simon Walker, head of the business leaders’ group, singled out Royal Bank of Scotland (RBS) and Barclays in a speech given at the Chartered Institute of Public Relations (CIPR). Referring to recent reports that 373 Barclays bankers are paid between £1m and £2.5m annually, another 50 receive £2.5m to £5m and five get in excess of £5m, while RBS pays 95 bankers more than £1m each, he commented: “Thousands of people in those two companies alone earn more even than the [UK’s] prime minister. This is in scandal-hit companies who have had a far from successful year.
“Now I recognise that Anthony Jenkins and Sir David Walker at Barclays are working hard to introduce a new culture in Barclays in particular. And as you can imagine given my job, I’m not a rabid anti-capitalist. But even I believe that this state of affairs is unacceptable.”
Walker said that remuneration packages were still too high: “Shareholder value has been destroyed, capitalism has been given a bad name, key measures of the market have been manipulated for cynical gains, taxpayers have shelled out billions to bail banks out, and yet vast rewards packages are still being handed out.”
This made it hard to oppose measures such as the European Union’s (EU) proposed cap on
bankers’ bonus payments
, he added.
“Just look at the EU’s bonus cap – wrong-headed and counter-productive as it is, the behaviour of some of our banks makes it difficult for anyone to stand at their side to credibly fight against it. They are harming the whole of British business by focusing only on their own short-term self-interest,” he said.
“That has to change, and it is the IoD’s responsibility to make the case for reforming capitalism and capitalism’s reward structures in order to make it happen – and to communicate to the public what genuinely good businesses look like. That is key to the delivery of better business in the UK.”
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