The Hester story at RBS has many parallels with the way the Labour government shafted Eric Daniels at Lloyds.
Prior to the financial crisis Hester had left banking and was running British Land, for which job he was no doubt handsomely rewarded. Come the fall of RBS, due at least in part to a failure of UK bank supervision, Hester is appointed to his position in RBS. The package is a little on the lavish side, but then you have pay up in order to get somebody above the average and Hester clearly fits that bill. Three years later, Miliband and Chuka Umunna are laying into him, not for his performance but because of his outrageous compensation package, negotiated by the government that they supported.
The similarity with Daniels is remarkable. Daniels was running Lloyds which probably had a few problems going into the financial crisis but nothing like the scale of HBOS or RBS. Actually that is probably a little unfair on lloys. It was a conservatively run bank with a very low risk portfolio. Daniels was running that quite nicely and no doubt being handsomely rewarded for running a steady ship.
Then comes the hand of Brown on his shoulder asking Daniels to do the country a favour by taking on the basket case that was HBOS. The country needed the strength and conservative approach of his bank to clean up the mess (that the government had supervised for the previous 10 years). So as well as running his old bank, Daniels took on the task of running a much bigger bank, but at the same salary.
But this was not enough for Labour politicians who lambasted Daniels for being paid so much while running a bank that had been bailed out by the government, overlooking the reality that what they had actually done was to swamp Daniels' nicely run bank in a pile of crap and expected him to do their dirty work of sorting it out using Lloyds equity cushion until that got wiped out by HBOS losses and the merged group needed a bail out.
Of course RBS shares opened nearly 3% down on the day so that saving £900k (£450k after tax) the Labour way has cost the country £700 million.
Yet another reason why another Labour government would be the final nail in the coffin of this country.
4 comments:
At the same time there are other bigger things going on which are not attracting much attention. I will be posting later on one.
Once again, myopia and hypocrisy are ladled - by politicians and broadcasters - all over a problem that 99% of the population don't, and don't want to, understand. I commend your analysis of the Lloyds story, even though it damns with faint praise. A parallel would be the way that 'dull' GEC made grillions while it was being run by Arnie Weinstock, but was destroyed in months by that monumental buffoon George Simpson.
As for Stephen Hester. of course he doesn't deserve to be paid loadsa money for doing a bloody hard job that he didn't want rather well, whereas illiterate, knuckle-dragging, prima donna footballers (and their managers & agents), teeny-bop lip-synchers (and their managers & agents), trash-novelists (and their agents), talentless actors (and their agents), TV and radio 'names' (and their agents), newspaper editors, to say nothing of Simon Cowell, all deserve every penny they can get. The hypocrisy surrounding this teacup-storm is breath-taking. Well, no, it isn't really. We should all be used to it by now.
Right now, I'm praying for some sordid scandal to sink the ambitions of Chukka Umunna, who could give lessons to Blair in brazen insincerity. If he ever gets his hands on the levers, gawdelpus all.
Ooooh, another supreme example of Labour hypocrisy was the way they handled the Millennium Dome. That was, of course, a Tory initiative; a very good one, to revive SE London with some cutting-edge architecture. It was magnificent and had immense vision.
As soon as Labour came to power, they ummed and aahed about the excessive financial commitment. They then put incompetent civil servants in charge of the project who delivered it late, filled the Dome with cheapjack populist trash, set the entry prices so high that most people couldn't afford to go, and then blamed the Tories for the entire fiasco. There was nothing wrong with the original vision, only the way that Labour cheapened it.
Now, long after all the trash has been cleared out, and the bad smell attached to the project has finally dissipated, the O2 Arena is indeed a successful and magnificent symbol of regeneration.
Maybe the formula for the boss of a state run bank should be a bonus of 1% of the value of liabilities taken of the UK balance sheet.
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