Memo to RBS Board: Walk, if you so wish

On the subject of the RBS board's alleged threat to resign should the traditional annual bonus pot be denied them by the Government (on behalf of we the people), the Times hedges its bets in a leader this morning, describing the course of denial as 'tempting' while repeating the oft-heard assertion that banks bleed talent when they can't pay these hard-driving geniuses millions in bonuses.

Thankfully, over on the Times' op-ed pages, Anatole Kaletsky doesn't mess about trying to graze his backside by sitting on the fence:

If these people threaten to resign, the Government should jump at the opportunity to clear them off the board, with no need for compensation payments of any kind... Who could run RBS if all these luminaries removed themselves? The answer is people with a sense of public service who have done well enough in other careers not to worry too much about the modest remuneration on offer — the sort of people who run public bodies such as the Royal Opera House or lead public inquiries into the reform of the health service...
 
The higher the salaries paid by RBS or any other bank, the more likely it is to fail, taking taxpayers’ money with it. The obvious and much discussed reason is that high salaries in finance generally reflect high-risk trading strategies… To maximise the chances of recouping its investment in RBS, therefore, the Government should ensure that the bank is run in the dullest, most risk-averse manner… the simplest banking operations should be quite profitable enough to recoup taxpayers’ money…
 
If limiting the size of the bonus pool encouraged the traders and investment bankers at RBS to move elsewhere, their departure should be a cause for celebration, not concern… What would then happen to the huge trading and investment banking businesses at RBS run by these highly paid and talented employees?... Now that global stock markets are on the road to recovery, selling off the higher-risk and more complex parts of RBS piecemeal would probably be more profitable than trying to keep the group together...
 
Which leads to the question of why bankers earn so much more than other similarly qualified workers. Is it really because they are so uniquely talented? Or is it because they have access to pools of capital, backed up by explicit or implied government guarantees? The answer is obvious… Rather than try to limit pay and bonuses directly, governments and regulators should simply insist that banks use all the revenues that they generate to increase their capital strength. In the case of RBS, a simple demand that the bank add a further £1.5 billion to its capital would drain the bonus pool and solve the problem.