January 26th, 2012
09:15 PM GMT
Davos, Switzerland (CNN) - It is perhaps not surprising that in a gathering of the elites at Davos, the issue of bankers’ bonuses is never far from the delegates’ minds.
But unlike in recent years - a time when bankers showed remorse over their high pay packets - there seem to be noises of a fight back.
Because with profits strong, the banking bonus culture is back - to the annoyance of many including the British Prime Minister David Cameron and the Governor of the Bank of England, Sir Mervyn King.
As they get ready to hand out the billions of dollars in extra reward, the critics are again saying this is unjust enrichment. Even more so, at banks like the Royal Bank of Scotland, bailed out and now majority-owned by the UK Government. The UK government appears to have got its way in ensuring RBS boss Stephen Hester’s bonus is slashed from GBP2 million to the benchmark of under GBP1 million (GBP963,000).
At Davos, I asked Barclays CEO Bob Diamond about the issue. He said it was all about "pay for performance." Diamond is not planning to offer up any concessions in his own bonus this year, which could be more than $15 million if reports are accurate. Instead, Diamond robustly said "every time I hear a political leader mention the eradication of pay for failure, I would like to hear them talk about the rewards for success."
He acknowledged that compensation will be down in the industry this year, and that he had to be "sensitive to the environment. "
Jamie Dimon, CEO of JP Morgan Chase, also recognizes the need to be sensitive. "People are angry because of lot of people in Wall Street made a lot of money as companies went down the tubes. And I agree with them." Calling it "a total disgrace," he defends his bank’s policy. "We have never had special severance packages. We’ve always looked at results over a long period of time."
This is unlikely to satisfy policy makers like Michel Barnier, the European Commissioner responsible for financial services, who says not enough has been done. He told me he’s hoping to introduce new regulations on compensation by the end of the year - something that will be deeply unpopular in the City of London, and confirm financiers’ view that Barnier is no friend of finance.
The arguments this year are not new and no stronger than previous years. It can be difficult to justify why people in the financial world get such large bonuses. In this morning’s Financial Times, John Gapper suggested "perhaps you simply get to eat a lot of chocolate if you work in a chocolate factory," which is unfortunately a statement that seems to be true.
I believe Bob Diamond will be sensitive to the environment, but it may not be enough for the vulture critics, waiting to attack the bonuses being handed out. I do wonder if the financial world has learned nothing from the past three years. Bonuses are all well and good, but at a time when so many are suffering from austerity - losing their jobs, worrying about paying the bills - a bit of gratitude, rather than greed, would not go amiss.
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