What is a banker really worth?

Barclays made a serious error over the pay of John Varley, the bank’s former chief executive, who stepped down in 2010 with a ‘goodbye package’ of nearly £4m – it wasn’t enough!

Sir Philip Hampton, RBS chairman, warns that the vilification of Fred Goodwin, RBS's former boss, has morphed into the persecution of his replacement, Stephen Hester. Photo: PA. By Jeff Randall - Telegraph

So says Sir Nigel Rudd, Barclays’ former deputy chairman, who led its remuneration committee.

As Britain’s state-controlled banks, RBS and Lloyds, prepare to unveil results and bonuses later this week, Sir Nigel’s comments in my television documentary (Sky News 7pm, Wednesday) will enrage critics who believe that bankers remain detached from public anger over jackpot salaries.

Sir Nigel, however, is adamant that Mr Varley made a “huge difference” to Barclays during the credit crunch, when rival banks fell apart. By raising funds privately, Barclays was able to survive without a bail-out from UK taxpayers.



“John Varley was underpaid. Because what he did [for Barclays] during the crisis was phenomenal,” Sir Nigel says. In his last year, Mr Varley received a salary of £1.1m, a bonus of £2..2m and a performance cash incentive of £550,000.

Sir Nigel, who is now chairman of BAA, the airports operator, offers advice to ministers wrestling with demands for a pay clampdown while trying to maximise value in the state’s bank shareholdings: “If I was the Prime Minister, I’d ban the use of fairness as a word, because I don’t think you can be fair.”

Sir Philip Hampton, RBS’s current chairman, warns that understandable anger about the banks’ past failings is becoming destructive. In particular, the vilification of Fred Goodwin, RBS’s former boss, has morphed into the persecution of his replacement, Stephen Hester.

“We do lynch mobs better than most, but I think the opprobrium is directed now at the wrong people – the people that are fixing the problems rather than the people that are causing the problems,” Sir Philip says.
He believes the main flaw with bank bonuses is that they were linked to profits which turned out to be “illusory”. The banks did not understand the risks they were embracing, but it took a while for profits to collapse, by which time the bankers had pocketed the cash.

Alistair Darling, who was chancellor when the financial turmoil erupted, says that many highly paid bankers were in denial and remain so. “One or two to this day still don’t realise they did anything wrong, which most people find just flabbergasting.”

In a reference to Mr Goodwin and his top team, Mr Darling says: “They didn’t know what they were doing and we, not them, to a large extent are paying the price for that.”

Mr Goodwin’s old adversary, Sir Peter Burt, who led Bank of Scotland when it was outbid by RBS in a takeover battle for National Westminster in 2000 , doesn’t hide his dislike of the disgraced banker but deplores the nationwide “witch-hunt” against him: “Perhaps Fred should count himself lucky there weren’t any lamp-posts low enough from which to hang him.”

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