The Metropolitan Police fears April’s G20 summit of leading developed nations in London could be the start of a series of protests, with the banks still paying large bonuses, becoming a target for protesters.
There is plenty of ill feeling surrounding bonuses, but are they to blame for the financial mess we are in? And if so, is a US-style bonus cap desirable?
If we look at the evidence, most bank staff have delivered the objectives they were set. bonuses are unpaid, they will be penalised by the mistakes of an influential few who get the seven-figure bonuses the public is so up in arms about.
Some banks are trying to find a way round the problem. The Royal Bank of Scotland is offering staff loans against the bonuses they are owed, which it has agreed to defer until 2010 under a deal with the government.
Staff can get upfront payments of up to 30% of their bonus, spread over the next three years, with up to 12% available now.
RBS has defended this move, saying it will help lower paid staff expecting a few hundred or thousand pounds – not seven-figure bonuses.
Of course, RBS may need further taxpayer support, so it is important that it can show it is not trying to pull a fast one. More transparency on how bonuses are to be paid is only right.
On a wider level, the bonus system needs reforming. The chief executive of Abbey, Antonio Horta-Osório, argues that bonuses should be deferred over several years and be subject to clawback if banks’ performance starts to deteriorate.
The design of bonus structures needs improving, rather than scrapping them or imposing an arbitrary cap.
Bonuses should be awarded with a longer timeframe, so the interest of shareholders can be aligned more closely with bank workers.
It makes sense for bonuses to be awarded in the form of shares with deferred periods.
Clawbacks are acceptable and should make bankers more accountable for their actions.
But policymakers need to be careful. Scrap bonuses promised to the hundreds of foot soldiers at the banks and you risk penalising the poorest paid in the sector.
Place a cap on bonuses and you risk losing the best talent to other countries and industries.
To blame the current problems in the banking system simply on the bonus culture is to miss the point.
There was a failure of governance and meritocracy, as well as a failure in the way bankers were compensated.