Royal Bank of Scotland - Essay Example

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The paper "Royal Bank of Scotland" analyzes the exorbitant bonus payout by the bank to its employees. It should be noted that this particular controversy affected not only the image of the bank in general but also its credibility and the credibility of the people managing the bank. …
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Royal Bank of Scotland
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Download file to see previous pages At the time the controversy was percolating in the banking community there were no existing regulations that will cap bonuses much less the regular compensation of the Royal Bank of Scotland’s most senior officers. Ergo for all intents and purposes senior managers were not violating the law and their obligation to do no fault before the bars of justice. However the ethical standard was not only thrown out the window the sense of propriety of the people involved was put into questions. The board of directors itself populated by either the same people who will receive the bonuses shall of course choose to receive the bonus. It should be noted that there is nothing wrong in getting bonuses however, getting it from a distressed bank or an institution that are not only losing money but will be bailed out by the government. Banks are the very foundation of the economy of the United Kingdom, if its citizens lost its trust and confidence in the banking sector the result would not only be economic dislocation but also total economic chaos. These events would precipitate from the shortage of currency which banks help to balance to ensure that their amount can be sustained by the sum total of the United Kingdom’s assets. Thus it is essential that banks are free from controversy that may cause the subject of the United Kingdom to lose its trust and confidence. The United Kingdom failure to institute immediate sanctions to erring banks and their officers were not enough and cannot be rectified by a mere threat of an increase in taxes on bonuses. Drastic measures such as those implemented by the United States to break down or collapse the banks into several pieces were even lobbied by some legislators from both houses of the United Kingdom. Considering that the government of the United Kingdom owns more than half of the Royal Bank of Scotland, it is therefore in the best interest of the government to protect its interest through the board seats it occupy.  The bonuses for all intents and purposes may have been given or agreed upon by the board of directors with the senior executives of the bank long before the losses were incurred. Thus, the senior management that was affected was well within their rights to receive the bonuses. However, considering that bonus are supposed to be rewards for a job well done. The bonuses are not only needed but it was never really justified in the first place. ...Download file to see next pagesRead More
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