Hourican Farce

May 12, 2009

No change at RBS, where executives are still raking it in through performance related bonuses.

John Hourican, the bank’s “head of global banking” was handed a £6 million shares and options package one month ago. Now, just a few weeks later, his bounty has risen in value to £11 million – all well earned of course.

Hourican won’t be able to cash in any of that money until 2012, but by then it’s likely that his options will be worth much more. Having been dished out a generous pay package at the trough of RBS’ fortunes, he was always likely to make a killing.

But packages like this were supposed to be a thing of the past. “Guaranteed bonuses” were flagged by commentators and politicians as a key part of the subprime jigsaw. Bankers had every incentive to take risky gambles, standing to gain huge windfalls if they succeeded.

Reselling dodgy mortgages was just one way that they attempted to do this. But in RBS’ case, the “global banking” division also opted to make huge investments in environmentally disastrous fossil fuel projects, earning the bank the nickname “Oyall Bank of Scotland.”

RBS claims that Hourican will receive “no rewards for failure” and that “he won’t receive a penny if he doesn’t deliver for the Group and its shareholders” which all bankers were supposed to do before the sub-prime meltdown. That’s not news, and it probably won’t amount to much in the long run.

But RBS say nothing about whether Hourican and his team are supposed to deliver for the people of Britain, and countries in which they invest, or for the environment.

As RBS is almost publicly owned, this should be made a key element of any banker’s remit.

But we are still stuck back in the 90s. The massive pay package that Hourican will receive, and is seeing rise in value, shows that RBS is still governed by the mentality that profits are inviolate.

Highly paid and, allegedly, “highly skilled” workers like Hourican, still seem to command multi-million pound rewards, even though they have disgraced themselves over the past decade.

And for everyone else, austerity measures will see their wages effectively reduced, all in order to prop up the pound and to protect investors’ assets.  And the taxpayer will be subsidising Hourican’s wages at the same time.

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