Pay at RBS is being suppressed for the greater good of bankers EVERYWHERE
Next time you see an RBS banker, give him or her at pat on the back. He or she isn't being paid as much as everyone else. And thanks to this supreme act of sacrifice, the wrath of the British tabloid press may yet be assuaged.
Needless to say, RBS put its third quarter results out today. Already, there has been some muttering in the Mail about losses and taxpayers-still-being-forced-to-fork-out-for-big-bonuses.
This follows, the 'storming' of a Glasgow branch of RBS yesterday by some people protesting against public sector cuts (one of whom was dressed as Dorothy from the Wizard of Oz).
The reality, however, is that RBS investment bankers aren't being paid very well. Nor are they being paid more than last year. Nor is RBS pushing out the boat to pay them and Squandering Taxpayers' Cash.
So far this year, the average amount accrued per head at RBS Global Banking and Markets is 110k ($176k, €125). This is 56% less than the amount accrued for investment bankers at Deutsche Bank, 42% lower than at Credit Suisse, 53% lower than at Goldman Sachs, and 47% less than investment bankers are getting at UBS.
If compensation continues to be accrued at this rate, pay per head at RBS will be down 28% year on year.
If it wanted, RBS could afford to pay more. The compensation ratio at global banking and markets for the first nine months of 2010 is only 34%, although this is up from last year's incredibly penurious 25%. Meanwhile, the cost income ratio at GBM for the same period is a mere 53%, putting RBS on a par with the equally parsimonious BNP Paribas.
If RBS did pay more, however, there would be an outcry. The protestors in Glasgow would multiply and the government would feel a greater need to legislate against high pay. For this reason, RBS is doing bankers everywhere a great service.
Less promisingly, RBS's cautious approach to compensation may turn out to be contagious. Comparatively pants pay doesn't seem to be dissuading people from working there. In the past nine months RBS GBM has hired 1,600 people. Other banks could even be tempted to follow its lead.
