Apologies to any polar bears coming out of hibernation, as you rub your eyes against the bright lights of headline glare, don’t panic you haven’t overslept and the hunting season isn’t for you. No, far more fun…  it’s the bankers’ bonus season, that time of year when the headlines have their sights firmly fixed on the numbers  coming out of the big names in banking.

This year so far, Stephen Hester has been bagged, along with Fred Goodwin (minus the Sir), like clay pigeons from the trap on a clear day, with no headwind, as the 2011 bonus-pot announcements get underway.  Apparently last year (2010 pot) an average of £1.2 million was paid to 323 of RBS’s top staff, with their 2011 pot for investment staff being about a half of it payments last year (£950 million). As bonus-bagging continues, the mix of lack of Euro growth, financial stress, rising funding costs to banks creating renewed squeezes on banks and credit supply will mean the economy will maintain its gloomy popularity for headline grabbing contradictions whilst corroding the elusive silver bullet.

The ECB has provided €489bn  in loans as a three year refinancing operation to eurozone banks, with `retrenchment’ the banking bingo word-of-the-month and bolstering working capital buffers the way to go, even if costs are higher.

Inflation could drop  further as prices lower  with the BoE predicting falls to as low as 1.5% by 2013  ( 2011 inflation report), whilst the BoE Monetary Policy Committee’s minutes (January) showed a split amongst its members, about whether the Bank should expand QE in 2012.

The UK isn’t alone in weak recovery and financial stress; the rate of growth in all of the major advanced economies has been sharply below their respective long-term averages.

Cash preservation, cost control and strengthening balance sheets will be the slow burn to melt the ice of uncertainty, so, for any polar bears coming out of hibernation, there’s no immediate financial climate change.

(Image and Article credit: Copyright SUF)