Ben Chu: Forget the bleats about those banking bonuses

Outlook Others, however, seem to be going backwards. For some reason Andrew Bailey has chosen to throw his weight behind the inalienable right of UK banks to pay their staff bonuses many multiples of their basic salaries. He brandished a back-of-an-envelope calculation before the Treasury Select Committee this week in his confirmation hearing as the new boss of the Prudential Regulation Authority.

He suggested the new European Union bonus cap could result in the banks hiking fixed pay by an aggregate of £500m a year. Is this supposed to be impressive? My own back-of-an-envelope calculation shows that the total staff costs of the four biggest banks (RBS, Barclays, Lloyds and HSBC) in 2012 were £44.5bn.

If readers will excuse yet another scatological metaphor, in the context of such vast costs that extra £500m sounds about as significant as a fart in a hurricane. Mr Bailey has inadvertantly confirmed that the EU intervention on pay will make next to no difference to the size of the cost bases of our banks.

We now know that the bleats about the cap making our financial institutions more precarious is mere industry scaremongering.