The unapologetic tone taken this week by Bob Diamond, the chief executive of Barclays, in testimony before a panel of MPs underscores an attitude that has upset the public
You don't get to the top of your trade by being timid or apologetic.
And so it was with Bob Diamond, the Barclays bank chief grilled by the British cross-party Treasury Select Committee at Westminster. The country's best paid banker, with an annual salary of £1.35 million (Dh7.75m) plus benefits, was taken to task on Tuesday over a range of financial matters, but it was bank bonuses that everyone got excited about.
No one can forget how the global economic downturn began. No one, that is, apart from the bankers, it seems. They are expected to pay themselves some £7 billion in bonuses in the coming weeks, slightly lower than last year but in general opinion, much, much more than they deserve.
It was time for banks to stop saying sorry for the financial crisis, said Mr Diamond. The debate had to move on. "There seems to be a period of remorse and apology for banks," he said. "I think the period needs to be over. We need banks willing to take risks, working with the private sector in the UK … so we can create jobs," he told the panel in two and a half hours of questioning.
Mr Diamond himself is on track for an £8m payout for his performance last year, after forgoing his bonus for the past two years. Asked by John Mann, a Labour member of the panel, if he would forgo his bonus again this year, he stonewalled. "I've not been awarded a bonus yet. I'll make that decision with my family, as I did last year," said Mr Diamond, who became the Barclays chief executive at the start of the year after running its investment arm for 14 years.
Big bankers' payout has become a highly toxic issue in Westminster, with ministers acutely aware of how it could further fuel public resentment over coalition cuts and the tripling of university fees. True enough, public fury flared over weekend reports that Stephen Hester, the boss of majority state-owned Royal Bank of Scotland, is in line for a £2.5m bonus. Moreover, the media reports came just a few days before the Financial Services Authority fined RBS and its subsidiary Natwest £2.8m for shoddy treatment of customer complaints.
But those expecting the banks to run scared of government threats of consequences for high payouts were always likely to be disappointed. For all its rhetoric, the government is really quite powerless to control the City, where the law of the free market rules. The government has increased the top rate of income tax to 50 per cent, and its new bonus levy will raise about £3bn. But other than these measures, David Cameron, the prime minister, would not "micromanage" the banks and has backed away from any further interference.
With stronger restraints, the banks might just be pushed to carry out their oft-repeated threat of relocating to where the profits are: to financial centres such as Singapore or Hong Kong.
It is something London cannot afford to happen. The industry contributed £53.4bn of taxes during the 2009-2010 financial year. The goose that lays the golden egg must not be strangled.
It's the same market principle that applies to bank employees. One of the main reasons they are paid such big bonuses is that the other banks do the same. Pay less than the others and your top bankers could leave for a better deal.
Mr Diamond said he was committed to be "responsible and to provide any restraint" he could on pay but repeatedly added that he had to compete against rivals such as Credit Suisse and Goldman Sachs. The latter alone is expected to have set aside US$15bn (Dh55.09bn) in pay and bonuses for past year for its 35,000 staff.
Competition or not, Mr Diamond's seemingly blithe comment asking banks to stop apologising has done little to damp down public anger. An industry that caused the crisis that engulfed the world economy, causing millions to suffer, should perhaps show a bit more contrition and humility.
"I am not convinced that the banks have fully grasped the scale of the crisis," Andrew Tyrie, the chairman of the select committee, told the Sky commentator Jeff Randall.
"People find it unacceptable that the institutions which helped create the crisis are now paying out such large bonuses, and I didn't feel that coming across strongly enough when, for example, Bob Diamond said the time for remorse is over."