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Tied up in a sack of snakes and tipped into the Thames

It is open season on bankers and their bonus culture.

It is open season on bankers and their bonus culture.

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Those of them fond of shooting game birds out of the sky in their leisure time, like former Royal Bank of Scotland chief executive Sir Fred Goodwin, have suddenly discovered what it feels like to be at the mercy of determined bands of beaters, trying to flush their ilk into the line of fire.

We shall see what flight patterns Goodwin, together with his ex-counterpart at HBOS, Andy Hornby, and the departed chairmen of Scotland's two oldest banks, Sir Tom McKillop and Lord Stevenson, exhibit this morning when they appear before MPs on Westminster's Treasury select committee.

The public mood, seized on by politicians on all sides, seems to be for mass retribution. Given the financial state we are all in, goes the cry, no banker in the land deserves a bonus for their past year's work. And if their bank insists on paying one, especially banks already in receipt of billions in public bailouts, they should examine their individual consciences and either say no, or pay every penny back into the public purse.

Even LibDem MP Vince Cable, normally the voice of measured reason in this crisis, has apparently been reminding journalists that, when the South Sea Bubble burst at the beginning of the 18th century, a resolution was proposed in parliament that bankers be tied up in sacks filled with snakes and tipped into the murky Thames.

It might make us all feel a lot better if some of them were placed in stocks and pelted with rotten tomatoes. But don't we need to be a mite clearer about which affronts against society we are trying to punish and which bankers bear some responsibility for inflicting them on us?

In the bubble years, the term banker became synonymous with six and seven-figure salaries and even bigger bonuses, stock incentive schemes and burgeoning personal pension pots. However, that was the world of the gilded few. In truth, most people who work in banks enjoy much more modest rewards. Many earn less than the average national wage. Getting a bonus isn't a passport to wanton excess. It's the difference between a living and a subsistence wage.

Accounting standards were changed more than 20 years ago to absolve companies of the need to report, in detail, salary bands within their pay structures and how many staff were on each one. These days banks, like other public companies, vary greatly in the kind of information they publish about their remuneration practices.

HBOS, now absorbed into Lloyds Banking Group, continued to offer quite a lot of pay detail. From its last full annual report and accounts, for 2007, we learn that 50,500 of its 74,225 staff were on a basic salary of between £13,000 and £24,750. All of them were entitled to a short-term cash incentive. A bonus, if you prefer.

That incentive target was between 10% and 12% of salary. At maximum they and a further 19,750 staff paid between £27,750 and £49,250 could expect between 20% and 30% of their basic as a bonus.

In a bad year, there was "a real chance of a zero outcome". Less than a thousand staff at the top of the HBOS earnings tree got the cream. And only a handful of them got the double cream.

Furthermore, the great mass of banking staff work in operations that, despite the credit crunch, remain profitable. They know nothing of super senior CDOs, US residential mortgage-backed paper or monoline exposures - the kind of risks that left Barclays, the first of the UK banks to report yesterday, with gross write-downs of £8.1bn. Nor do they do the kind of things which brought Lehman Brothers to its knees, allowing Barclays to buy up its viable North American business and book a compensating £2.2bn gain already on the fire-sale price it has paid.

The bulk of banking staff work in retail, in insurance, in commercial banking, in areas where, as the Barclays results also show, earnings remain buoyant despite the mayhem elsewhere.

Many of these bankers took past bonuses and invested them in the equity of the bank they work for. Like other shareholders they have seen their paper stake in their bank wither away in value before their eyes.

Are they now to be told that their bonus will no longer be paid to help salve understandable public outrage over what their bosses got up to?

Surely, stage one in any rational debate about bankers and their bonus culture is to insist on much greater and more consistent transparency from all banks, from top to bottom of their payrolls, about precisely how they pay for performance.

Whether banks now have the taxpayer on their share register or are only contemplating participation in the government's asset protection scheme, part of the up-front price should surely be a comprehensive public statement of their remuneration policy and how it is operating at every pay grade. That way we can all judge who is being rewarded for growing the business and who is being rewarded for failure.

Barclays saw profits fall 14% last year. Group chief executive John Varley says, overall, bonus pools are down 48% on average. And in Barclays Capital and Barclays Global Investors, where the biggest profit declines were clustered, bonuses were down even more.

Before the stocks are rolled out or sacks of snakes prepared, that kind of remuneration detail needs to be spelled out by every bank.

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