To bonus or not to bonus, that is the question?

News that RBS chief Stephen Hester has decided to forego his £1.6m bonus will not come as a huge surprise to many, not least in anticipation of the substantial losses the bank posted for the 2009 financial year this week.

While the move must be applauded, his financial restraint cannot be seen as entirely altruistic. Given the furore of recent months about bankers’ bonuses and the heavy weight of public (for public, read shareholder) opinion/disquiet on the issue, the decision will no doubt help render the £850 billon bung of public money used to prop up failing financial institutions slightly more palatable.
 
A new YouGov poll reveals the ongoing extent of public anger at City excess. It finds that 76% of people would support a cap on bonuses, that 59% support windfall taxes on bankers' bonuses, and that 60% want the tax to be extended to those working in hedge funds and ­private equity houses.
 
There was also support in the poll for other forms of regulation, with most in favour of a levy on financial transactions (a Tobin tax). Almost seven out of 10 wanted retail and investment banking separated. Three out of four people said they did not think banks had changed and were still not being properly regulated.
 
So it is absolutely right that our banks should be taking the moral highground on the subject of bonuses. (What is perhaps more surprising is that Hester - whose salary is £1.2 million - should even be considering accepting the reward.)
 
But is it time to end the blame game? The banks made their mistakes. The shareholders had a role to play too. Over a year on, isn’t it time to focus less on attributing guilt, and instead putting the mechanisms is place to ensure that the fragile recovery showing signs of emerging is given a real change at survival.
 
All the signs are that investors are more engaged, corporates are going a better job of listening. Banks are looking to do sensible things to incentivise people in an appropriate way while at the same time allowing them to hang on to valuable staff.
 
John Varley – Hester’s oppositive number at Barclays - last week declined to take a bonus and Eric Daniels, chief executive of the taxpayer-funded Lloyds Banking Group, bowed to pressure and on Monday said he would waive his bonus – this year of £2.3m – for the second year running.
 
One question begs; will their FDs be under pressure to follow suit? Let’s face it, if push came to shove, Chris Lucas at Barclays, RBS’s Bruce van Saun and Tim Tookey at Lloyds Banking Group probably wouldn’t have much of a leg to stand on. To buck that trend would take quite a banker...