RBS is losing some talented staff, but maybe it doesnt matter too much

By Tracy Corrigan, Assistant Editor Published: 7:13PM GMT twenty-five February 2010

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Royal Bank Of Scotland Group

Yet I would have thought that if admittedly it"s a big if he is not as well worried about the money, he should feel rather gratified with the approach things are going. Despite being state-owned and losing "star" bankers to publicly traded rivals, RBS"s investment promissory note multiplication well well known as Global Banking and Markets has achieved well and the bank is removing at the back of on the feet. This seems to indicate that RBS, the main shareholder UK Financial Investments and the supervision have got it about right on remuneration, however disorderly the process.

It would frequency be suitable for RBS to be outbidding Goldman Sachs and Barclays Capital in the jobs market, and in any case, it is not perplexing to finish up with a commercial operation that looks most identical to possibly of those. But to stop profitable bonuses exactly would frequency assistance safeguard British taxpayers replenish their investment. As it is, RBS has left serve than others in shortening the suit of revenues customarily paid out to investment bankers in bonuses that for a little weird reason ran at a customary rate of around 50pc in the pre-crisis days when such things were glibly blamed on marketplace forces.

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Despite these constraints, RBS"s net loss of �3.6bn last year is not as big than approaching and the bank is on lane to lapse to profit. The reason it lost income is that it is still receiving hits on loans done in bang times, when it was famously inexhaustible about lending the money, as well as rewarding the staff who handed it out. But the bank pronounced on day: "Signs that impairments competence have appearance crop up to have been borne out in the fourth quarter." Unless the economy collapses again, RBS"s liberation is well underneath approach and forward of the own targets.

Mr Hester says that RBS is being managed commercially, that is unequivocally great news, given there were big worries on this score, when the supervision took the infancy stake. But he told Radio 4"s Today programme that "some of the best-performing people have been withdrawal in their thousands. The people who left us last year, I believe, would have increasing the increase by up to �1bn over the ones that we"ve got."

Perhaps thousands of indeed shining staff unequivocally have left RBS, though I think he might be articulate them up a bit (I have beheld that bankers lend towards to have an farfetched perspective of "talent" in their industry, in the same approach that relatives customarily overreach their children"s intelligence). It might even be loyal that RBS would have done some-more income if they had stayed, though that is certainly unfit to quantify. But so what? Maybe, right away that RBS has shrunk the business, it will run ideally well with somewhat less shining people. After all, the pre-crisis examination of profitable over the contingency to capture the most appropriate minds of Wall Street and the City of London didn"t work that well: RBS achieved worse, not better, than alternative banks profitable out reduce bonuses. So far RBS has hold on to sufficient efficient traders to have lots of income in admittedly enlightened marketplace conditions. Of march it is a wily commercial operation in the open sector, but profitable out a reduce suit of revenues in bonuses is, mathematically speaking, great for profits, not bad.

And one approach or another, arrangement opposite the industry is starting to slip, at last. Shareholders and regulators are, belatedly, engaging. Mr Hester is not the usually trainer to have longed for out. Eric Daniels of Lloyds, additionally in supervision hands, came underneath identical pressure; John Varley and Bob Diamond of Barclays have additionally skipped their bonuses and John Mack of Morgan Stanley has foregone his for 3 years in a row. Furthermore, Mr Mack warned this week that "if we don"t do something, the supervision will do something." I had roughly lost goal that bankers would "do something" about remuneration, given they abandoned the blindingly viewable event to remodel industry practices in the arise of the crisis.

Perhaps observant bye-bye to a reward or dual is some-more than only a gesture, as I had creatively thought. Indeed, it contingency be rather sorrowful to watch, as Mr Mack has only done, a 28-year old merchant give up his pursuit notwithstanding an $11m bonus, when a sidestep account paid him $25m. Bank bosses will do zero but the hazard of domestic action; but right away that they have less to lose, they might be some-more prone to get tough. Mack the Knife, as he is well well known on Wall Street, is wielding his arms - he has due an "open discussion" on the issue. It"s a second possibility for alternative bankers. There will not be a third.

Tracy.Corrigan@telegraph.co.uk