Thursday, February 25, 2010

Profit (and loss) share - RBS, British Gas

RBS lost £3.6 billion pounds last year. They gave out £1 billion in bonuses, because the losses weren't as bad as they might otherwise have been. They are 84% owned by the UK taxpayer. Had that £1 billion been divided between UK taxpayers, it would have represented a few tens of pounds each. Divided between the 141,000 people that the whole RBS group employs (according to Wikipedia), this comes to over £7000 each. I somehow doubt that everybody in the group would see a bonus of anything like that amount. Also, since the depressed economy is arguably due to financial mismanagement in the banking sector, bonuses being visibly divided between the rich "elite" of a company when there are now graduates who are unemployed or working for nothing is even more insulting to the rest of the economy.

I am reading Andrew Marr's "The Making of Modern Britain", and it is interesting to compare the Tory opposition to tax reform in the first decade of the 20th Century.

According to BBC news, the RBS chairman says that employees have been leaving in their thousands over the reduction of bonuses. Had these people not left, the bank might have expected to have made another £1 billion (that is, reduced its losses to £2.6 billion pounds).

British Gas made a profit of about £600 million last year. This apparently represents about £3 per month per customer - hardly an extortionate amount, though there has been criticism that their retail prices aren't falling as fast as their wholesale prices. Prices for gas and electricity in the UK are amongst the lowest in Europe.

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