Belfast Telegraph

Banks mustn't flaunt profit at our expense

The performance of the UK's big banks will come under intense scrutiny this week.

The first of them to release half year figures, HSBC, revealed profits of more than £7bn for the last six months. While this is a welcome development - healthy banks are required for a healthy economy - there are several disquieting aspects to the bank's report.

Firstly, in spite of performing very well as a business, HSBC, in common with other major financial institutions, is still remaining tight-fisted when it comes to lending to other businesses, especially those in the SME sector, the backbone of the UK economy.

The Chancellor George Osborne said at the weekend that the banks have a moral obligation to lend to businesses to aid economic growth. There seems less reason for holding back on lending given the strength of the bank's balance sheet.

But the one financial figure which will really rile the public is the banks' continued payment of huge bonuses to certain staff. HSBC, for example, reported a 39% increase in staff pay and bonuses in its Global Banking and Marketing division since 2009.

This seems almost immoral compared to the hardship faced by millions of ordinary workers through the economic crisis, brought about in large measure by bad banking practices.

While the investment bankers may be quaffing champagne with their huge bonuses, and pushing up property prices in the stockbroker belts, most people are tightening their belts in advance of austerity measures being introduced by the government in the autumn.

The banks may argue that they have to pay huge bonuses to retain staff or they will leave for sunnier economic climes. It is an argument which never has been tested, and if the other big banks - which, unlike HSBC, needed taxpayers' money to bail them out - report a similar bonus culture, there may well be a public outcry.

There certainly should be.


From Belfast Telegraph