When I wrote something last month saying that banks will pay large bonuses at their peril this year, someone said this wasn’t so and that banks have no need to consider the opinion of the general population.
Events of this week suggest that that someone was wrong.
Meanwhile, there has been public disapprobation over Hester’s pay deal at RBS, the Guardian is asking searching questions like, 'Is the gravy train back?', and the currently impotent Mervyn King is expressing disappointment at the apparent return to bonuses as usual.
Do banks care? They should. The UK faces a soaring budget deficit and an election within the next 12 months. The payment of big bonuses in 2009 will be an invitation to further increase income taxes. It will also reduce public support for the City at precisely the time when the government needs encouragement to protect the financial services industry from over-zealous European regulation.
Big bonuses now may mean much smaller bonuses forever after.