The Great Debate UK
- Peter Dixon is a guest columnist, the views expressed are his own. He is global financial economist at Commerzbank -
In the course of this week, we have received a mixed bag of first half results from all the big UK banks. On balance, earnings were slightly ahead of expectations, even for those banks which still registered big losses.
The broad conclusion which we can draw is that retail operations have endured a tough six months, thanks to rising default rates and higher loss provisions, but those banks with significant trading operations have been able to offset these problems due to a major improvement in global market conditions. Moreover, the results have reawakened public interest in the bonus culture and have raised many questions about where we go from here.
The question of bonuses has become highly emotive in recent months. The standard argument used by opponents is that it is immoral for banks which have been propped up by public money to reward those who gamble in the casino of international finance – particularly since it is precisely such behaviour which brought the banks to their knees in the first place. Banks counter this criticism by arguing that good fee earners generate huge income for their company and should be rewarded commensurately.