Lorna Ashworth: There’s still some value in a bank bonus system

EUROPE’S recent tougher stance on bankers’ pay, which could see bonuses capped to 100 per cent base salaries, may be welcomed by many but I believe an opportunity is being missed to address the key issue behind bonuses – affordability.

“Bonus” has become a dirty word, especially in the context of the banking sector which has traditionally paid the highest bonuses. Whether it’s the money on offer or the perception that failure is being rewarded, the bonus bonanza will continue to generate public and private hostility.

Rather than react by removing bonuses altogether, we need to fix what seems to be a broken system, applying reason, justification and consideration. Self-funded bonuses would be a welcome solution. By defining the link between performance, affordability and the level of bonus paid, the process would be transparent.