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An Open Letter From An RBS Staffer :: Business News :: Here Is The City News :: The Latest Business & Financial Markets News And Views
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The announcement this week within the walls of Royal Bank of Scotland (RBS) offices up and down the country has left a bitter taste in the mouths of those staff who feel that they have been falsely accused, publicly tried and now penalised without the chance to defend themselves.
Undeniably the investment banking arm of RBS, Global Banking and Markets (GBM), has been the problem child of the group and has been rightly saddled with most of the blame for the recent losses and writedown's. The bottom line figures do not lie, and it will be announced later this month that, excluding the GBM losses this year, the RBS Group would have made a profit in 2008. (Admittedly not as big as in previous years, but a profit nonetheless).
There are roughly 20,000 people who work for GBM, which is down a few percentage points on a few months ago due to redundancies, end of contracts and 'natural wastage'. In the media today, all of those 20,000 staff are described as 'bankers', and the bonuses paid to those staff as 'banking bonuses'. Even those who turn up to work every day to install PC's and software, type minutes and arrange meetings for more senior personnel and to create accounting reports for the back office will be described as such. However, I can't help feeling that this description is, at a minimum, misleading. There are a minority of these 20,000 who could rightly claim to be bankers....the remainder are merely there to support the bankers in their decision making and the implementation of their strategies (without having any impact on the strategic direction of GBM).
Although the actions of the minority of bankers have led to an overall financial loss for GBM this year (similar actions in other institutions have had a similar effect for most other global investment banks), the bulk of the write-downs have come from the positions held by ABN AMRO which was acquired by RBS in 2007. And there should certainly be an amount of responsibility taken by those empowered to make the decisions which have ultimately resulted in the perilous state that RBS now finds itself. The vast majority of the 20,000 who sit under the GBM umbrella at RBS are not those people however, and, ironically, those who should be paying have been let off lightly. There ought to be a culling of those who remain who were able to make or greatly influence the terrible decisions which were taken. And this culling exercise should involve a straight sacking (not redundancy and all the niceties that come with that), and the money saved from paying these 'high-earners' should be redirected to the genuine 'high-performers'.
Those who were at the top and who have since departed their roles at RBS have already had their day in front of the House of Commons Treasury Select Committee. However, no form of justice seems to have been meted out to these people so far, and there is very little expectation that it will be. These people need to be held accountable, not just for wrong or bad decisions, but for the catastrophic outcome. These people, who earned many many more times as much as the average salary paid to RBS staff around the world, have simply been allowed to walk away 'scot' free, having played with, and in some cases ruined , the livelihoods of the staff they have left behind.
The fact that there is still to be over £300M in bonuses paid to 'senior high performers' due to 'legal requirements' is purely a nice way of stating that when RBS bought its stake in ABN, there was an agreement to guarantee bonuses for all those staff who would transfer to RBS as part of the purchase agreement. More fool former CEO Sir Fred Goodwin for agreeing to this in the first place.
The replacement management team, of course, has taken the easiest decision to appease the torch carrying media. The government have obviously, and understandably, been involved in setting the bonus pot for RBS this year. However, this has come at the end of a very tough year for a lot of GBM staff, who had their bonus criteria laid out to them at the beginning of 2008. This criteria has now been changed at the 11th hour, and most GBM staff feel aggrieved that they are not being rewarded for achieving, and in some cases surpassing, the objectives which were originally set them by their bosses.
Many of those not involved in the banking sector will quite rightly be stating that when times are bad and profits wiped out, that bonuses should not be paid. This is a fair stance. However, it must be noted that even in the very good times (e.g. 2007 when RBS posted a profit approaching £10bn) most of those 20,000 staff did not receive a bonus anywhere near the figures quoted in the media for 'senior bankers'. There are many support staff who work within GBM who would have received no more than the 10% 'profit share'. Admittedly this is not to be sniffed at, and is a lot more than the average British worker will receive as a bonus most years, however, it is nowhere near the hundreds-of-thousands or millions usually quoted in the media.
It should also be remembered that all GBM staff are also taxpayers, and therefore will bear some of the brunt of the cost to the government as will all other tax payers. In addition, a majority of the staff are also shareholders - who have seen the value of their shareholdings slide dramatically in the last few months. A true triple whammy.
The biggest irony of all this, of course, is the fact that the driving force behind the compensation decisions now being made by RBS is the British government. These are the same Members of Parliament who didn't want the general public to have access to their expenses claims! And the fact that MP's are also allowed to claim, amongst various other expenses, a £24,000-a-year second homes allowance, is enough to push them well over the average bonus awarded to GBM staff at RBS in that record-breaking year in 2007!!
There is, however, an upside to all this. I feel that, as I am now being treated more like a Civil Servant, I should have no qualms about working between 35 and 40 hours a week (no overtime payments, means no overtime - right?). And, all of a sudden, the pressure to perform has gone.
Finally, I guess with no bonus, no pay rise, and no profit share this year, I should probably be thankful that I still have a job. In the current economic climate that's a big bonus in itself. However, I am slightly tired by the incessant knocking of all the RBS GBM staff - it was only a few senior guys who managed to stuff us all up. We are not all a bunch of bankers, you know!'.
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Do you not sometimes feel that things happen for a reason.
A
The announcement this week within the walls of Royal Bank of Scotland (RBS) offices up and down the country has left a bitter taste in the mouths of those staff who feel that they have been falsely accused, publicly tried and now penalised without the chance to defend themselves.
Undeniably the investment banking arm of RBS, Global Banking and Markets (GBM), has been the problem child of the group and has been rightly saddled with most of the blame for the recent losses and writedown's. The bottom line figures do not lie, and it will be announced later this month that, excluding the GBM losses this year, the RBS Group would have made a profit in 2008. (Admittedly not as big as in previous years, but a profit nonetheless).
There are roughly 20,000 people who work for GBM, which is down a few percentage points on a few months ago due to redundancies, end of contracts and 'natural wastage'. In the media today, all of those 20,000 staff are described as 'bankers', and the bonuses paid to those staff as 'banking bonuses'. Even those who turn up to work every day to install PC's and software, type minutes and arrange meetings for more senior personnel and to create accounting reports for the back office will be described as such. However, I can't help feeling that this description is, at a minimum, misleading. There are a minority of these 20,000 who could rightly claim to be bankers....the remainder are merely there to support the bankers in their decision making and the implementation of their strategies (without having any impact on the strategic direction of GBM).
Although the actions of the minority of bankers have led to an overall financial loss for GBM this year (similar actions in other institutions have had a similar effect for most other global investment banks), the bulk of the write-downs have come from the positions held by ABN AMRO which was acquired by RBS in 2007. And there should certainly be an amount of responsibility taken by those empowered to make the decisions which have ultimately resulted in the perilous state that RBS now finds itself. The vast majority of the 20,000 who sit under the GBM umbrella at RBS are not those people however, and, ironically, those who should be paying have been let off lightly. There ought to be a culling of those who remain who were able to make or greatly influence the terrible decisions which were taken. And this culling exercise should involve a straight sacking (not redundancy and all the niceties that come with that), and the money saved from paying these 'high-earners' should be redirected to the genuine 'high-performers'.
Those who were at the top and who have since departed their roles at RBS have already had their day in front of the House of Commons Treasury Select Committee. However, no form of justice seems to have been meted out to these people so far, and there is very little expectation that it will be. These people need to be held accountable, not just for wrong or bad decisions, but for the catastrophic outcome. These people, who earned many many more times as much as the average salary paid to RBS staff around the world, have simply been allowed to walk away 'scot' free, having played with, and in some cases ruined , the livelihoods of the staff they have left behind.
The fact that there is still to be over £300M in bonuses paid to 'senior high performers' due to 'legal requirements' is purely a nice way of stating that when RBS bought its stake in ABN, there was an agreement to guarantee bonuses for all those staff who would transfer to RBS as part of the purchase agreement. More fool former CEO Sir Fred Goodwin for agreeing to this in the first place.
The replacement management team, of course, has taken the easiest decision to appease the torch carrying media. The government have obviously, and understandably, been involved in setting the bonus pot for RBS this year. However, this has come at the end of a very tough year for a lot of GBM staff, who had their bonus criteria laid out to them at the beginning of 2008. This criteria has now been changed at the 11th hour, and most GBM staff feel aggrieved that they are not being rewarded for achieving, and in some cases surpassing, the objectives which were originally set them by their bosses.
Many of those not involved in the banking sector will quite rightly be stating that when times are bad and profits wiped out, that bonuses should not be paid. This is a fair stance. However, it must be noted that even in the very good times (e.g. 2007 when RBS posted a profit approaching £10bn) most of those 20,000 staff did not receive a bonus anywhere near the figures quoted in the media for 'senior bankers'. There are many support staff who work within GBM who would have received no more than the 10% 'profit share'. Admittedly this is not to be sniffed at, and is a lot more than the average British worker will receive as a bonus most years, however, it is nowhere near the hundreds-of-thousands or millions usually quoted in the media.
It should also be remembered that all GBM staff are also taxpayers, and therefore will bear some of the brunt of the cost to the government as will all other tax payers. In addition, a majority of the staff are also shareholders - who have seen the value of their shareholdings slide dramatically in the last few months. A true triple whammy.
The biggest irony of all this, of course, is the fact that the driving force behind the compensation decisions now being made by RBS is the British government. These are the same Members of Parliament who didn't want the general public to have access to their expenses claims! And the fact that MP's are also allowed to claim, amongst various other expenses, a £24,000-a-year second homes allowance, is enough to push them well over the average bonus awarded to GBM staff at RBS in that record-breaking year in 2007!!
There is, however, an upside to all this. I feel that, as I am now being treated more like a Civil Servant, I should have no qualms about working between 35 and 40 hours a week (no overtime payments, means no overtime - right?). And, all of a sudden, the pressure to perform has gone.
Finally, I guess with no bonus, no pay rise, and no profit share this year, I should probably be thankful that I still have a job. In the current economic climate that's a big bonus in itself. However, I am slightly tired by the incessant knocking of all the RBS GBM staff - it was only a few senior guys who managed to stuff us all up. We are not all a bunch of bankers, you know!'.
------------------------------- merged -------------------------------
Do you not sometimes feel that things happen for a reason.
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