Stephen Hester was right to turn down his bonus

January 30, 2012 4:02 PM

Last week I wrote about how it was wrong for Stephen Hester to be getting a bonus of nearly a million pounds, while taxpayers were still so far from getting their money back after the massive bailout.  Last night it was announced that he was going to turn the bonus down.  He deserves credit for that, but some commentators have pointed to a fall in the bank's share price this morning and argued that taxpayers have lost out as a result of the decision.  The problem with their argument is that other British and European banks are down even more.

At the time of writing the RBS share price is down by 3.21 per cent, which is certainly bad news when every one of us owns thousands of shares in the bank, our share of the 82 per cent the Government has owned on our behalf since the bailout.

But Lloyds are down 4.47 per cent, Barclays are down 4.33 per cent.  Banks in Continental Europe are having an even worse time.  Credit Agricole is down 7.54 per cent; BNP Paribas is down 6.76 per cent; and Deutsche Bank is down 3.66 per cent.  As I wrote in my post last week, "most European banks have had a hard time this year" and they are continuing to struggle with fresh worries in the eurozone.  British politicians and commentators can be very self-obsessed and think that just because we're all talking about Stephen Hester's bonus it must be the critical issue affecting the firm's share price.  But there is little evidence that is actually what is going on.

Earlier this afternoon, in a debate on Sky, I argued that Stephen Hester had done the right thing, and that this wasn't the time to be paying him a big bonus.  You can watch the debate above.

 Last week I wrote about how it was wrong for Stephen Hester to be getting a bonus of nearly a million pounds, while taxpayers were still so far from getting their money back after the massive bailout.  Last night it was announced that he was going to turn the bonus down.  He deserves credit for that, but some commentators have pointed to a fall in the bank's share price this morning and argued that taxpayers have lost out as a result of the decision.  The problem with their argument is that other British and European banks are down even more.

At the time of writing the RBS share price is down by 3.21 per cent, which is certainly bad news when every one of us owns thousands of shares in the bank, our share of the 82 per cent the Government has owned on our behalf since the bailout.

But Lloyds are down 4.47 per cent, Barclays are down 4.33 per cent.  Banks in Continental Europe are having an even worse time.  Credit Agricole is down 7.54 per cent; BNP Paribas is down 6.76 per cent; and Deutsche Bank is down 3.66 per cent.  As I wrote in my post last week, "most European banks have had a hard time this year" and they are continuing to struggle with fresh worries in the eurozone.  British politicians and commentators can be very self-obsessed and think that just because we're all talking about Stephen Hester's bonus it must be the critical issue affecting the firm's share price.  But there is little evidence that is actually what is going on.

Earlier this afternoon, in a debate on Sky, I argued that Stephen Hester had done the right thing, and that this wasn't the time to be paying him a big bonus.  You can watch the debate above.

 

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