Bonus Season

We are currently in the midst of the bonus season, with many banks having already announced their bonuses for this year.  The chief executive of Barclays bank, Antony Jenkins is among the latest to forego his £1m bonus this year. His decision to accept this bonus would have caused much controversy following the bank being fined £290m for rigging the benchmark Libor rate and also the mis-selling of payment protection insurance for which the bank has set aside £2bn to pay for claims. You can read more about this issue here Barclays Libor/PPI scandal.

Antony Jenkins has said in a statement:

"The year just past was clearly a very difficult one for Barclays and its stakeholders, with multiple issues of our own making besetting the bank. I think it only right that I bear an appropriate degree of accountability for those matters, and I have concluded that it would be wrong for me to receive a bonus for 2012 given those circumstances."

His decision to waiver his bonus follows that of Stephen Hester, chief executive of Royal Bank of Scotland, who has already decided to renounce his bonus following the bank’s computer crisis scandal last year. This move will pressure other top bankers to follow their example. António Horta-Osório, chief executive of Lloyds Banking Group, and Stuart Gulliver, boss of HSBC, are both yet to announce whether or not they will be accepting this year’s bonuses. These two banks have also faced scandal this year and the bosses could face interrogations about their decisions to accept these bonuses.  

The issue of banking bonuses is one of great debate within the financial sector. In this blog I will explore this area further, looking at the reasons why banks pay bonuses, the taxes imposed on them, public opinion of bonuses and whether or not this could be the end of such big bonuses?