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Are bonuses a vital part of the UK banking sector?

After Stephen Hester commented on the fact that Royal Bank of Scotland stands to lose some of the top talent in the UK financial sector because of pay restrictions and bonus issues, many are now asking whether bonuses are indeed a vital element of the UK banking sector.

While the UK government would have you believe that all bankers in the UK are "the devil in disguise" the truth is that the UK financial sector has brought in billions upon billions of pounds of income tax and corporation tax over the years. It has been at the centre of the UK economy and many believe it to be the main driving force in the UK. Therefore, the need to attract the best financial minds from around the world is paramount and if this involves large-scale bonuses for success then surely this is a price worth paying?

However, there does need to be some form of regulation within the UK financial sector to ensure that the "tail does not wag the dog" and the UK government has more control over the economy and the financial sector. How and when this will be done is a matter of great concern and great discussion but we need to see significant movement in the short, medium and longer term. The need to find a balance between remuneration/bonuses and regulation of a sector which has evolved over the years is vital to the success of the UK as a whole.

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