Global Crisis

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The Worst is Over for Ireland? — “Maybe” according to Bank of Ireland shares (Photo credit: Canadian Pacific)

So here is the dilemma. The taxpayer is nursing a hefty loss on RBS shares. The public are desperate to find blame. The unions are up in arms over job losses. Whilst all this squabbling goes on, the facts are clear.

RBS needs to become profitable again. Executive pay is relative and at the moment the going salary may indeed be circa £1m. If you pay peanuts you get monkeys and everybody loses out.

However any derivative wizard will tell you that the bonus scheme should only kick in at the break even price for the taxpayer. In short, the bonus options are worthless until RBS shares reach the break even price for the taxpayer and then rise pro rata with the share price. Why not even throw in an expiry date as well just for good measure?

This way everyone benefits from what is undoubtedly a very grim situation. One final thought, SME’s are crying out for bank finance. Nobody is lending. What an opportunity to be a bank!

Throw in a few jobs as well and everyone really is a winner.