Blow the whistle on bank-ball. Buy the stock instead

HQ: 1 February

I was drifting off after the end of the final episode of 'Birdsong', when out of the mist from a couple of glasses of Macon Lugny I was yanked from slumber by the jerky tones of Robert Peston, telling me Stephen Hester had bowed to political and public pressure and waived his bonus share incentive scheme valued at £963,000.

I was spitting blood. I couldn't get any sense out of the Old Girl at all. She was furious about all the spluttered Burgundy on the new carpet.

I couldn't get it, I told her there was little if any correlation between the emoluments of the CEO of Royal Bank of Scotland (RBS), whose services had been sought after by the government, the Treasury and UKFI than those stigmatised as casino investment banking bonuses.

It was late, but I had to shout at someone. So reluctantly I called Ghastly. At least I thought he might be sympathetic. I should have known better. He really is the most unscrupulous and self-centred individual.

"You haven't seen anything yet, Old Boy!" he said sardonically. "Wait until 10 February, when Barclays's (BARC) results are posted.

Bob Diamond may be a philanthropist to some degree, but he's not a charity. Then on 23 and 24 February RBS will tell us how much John Hourican, ex-ABN Amro, and Ellen Alemany of Citizens Bank are going to pocket - £4-5 million?

And what about Stuart Gulliver's mob at HSBC (HSBA)?

The Foetus - Nasal Ned - and his bloodthirsty cohorts together with dear old Vince "Goodman" Cable and Cleggy - they'll have a field day.

Ghastly was really less than interested but I sallied forth regardless. "This is a terrible day for capitalism and commercial democracy", I ranted.

"Politicians should have been much more supportive of Hester - they recruited him in the first place for f***'s sake! In the circumstances he has done a great job."

And here it is.

RBS's balance sheet size is down from a gargantuan £2.2 trillion by £700 billion.

A loss four years ago of £26 billion has improved with a profit of about £2 billion likely this year.

Who could possibly have legislated for the staggering level of incompetence displayed by EU politicians?

Not only have they been incapable to date of arriving at a consensus over the sovereign debt crisis which has left Europe standing over a recession precipice, but at the same time they have trashed the banking sector's balance sheet.

Lord Oakshott's crass comment that Project Merlin has not been met wasn't helpful. Of course, it hasn't, you old windbag. What bank is going to lend money to a counterparty that does not have the ability to pay it back? Idiot.

I hope the government and many other politicians understand that if they push Stephen Hester too far, he will resign, and who could blame him?

Does he need this aggravation when there are plenty of decent jobs for a person of his calibre out there? Hester's leaving would send very dangerous signals to the rest of the world that the government was incapable of running its affairs. The share price would drop like a stone and the City's reputation could be damaged irrevocably. If it did not want RBS to employ people with commercial acumen with the authority to go with it, the government should have stuffed the board with civil servants. It chose not to.

Then, not content with the Hester bonus furore, the government chose to strip Fred Goodwin of his knighthood - perfect timing - orchestrated to a tee and if anyone tells me to the contrary I will choose not to believe it.

What about the others in Lloyds Banking Group (LLOY), HBOS and RBS? To think Goodwin brought RBS to his knees single-handed is naïve in the extreme. He had a powerful board behind him and even more authoritative non-executive directors, who are purported to have demanded increased shareholder value, which necessitated unnecessary acquisitions.

Politicians are in danger of making a convenient political football out of these issues, which could blunt the financial sector's recovery and discourage international investment in London.

Confidence is so low - it's amazing that the Prime Minister and government are not more sensitive and therefore concerned.

Nothing surprises me these days about Labour - an unattractive party full of envy and spite. We know the taxpayer is angry, I'm still one of them even though I am retired. Get over it.

The laughable thing about Miliband is that he has zero commercial experience, so what makes him such an authority on business and the City escapes me.

Recently, Mayor Johnson and the PM encouraged French bankers to come to London to ply their trade. Excellent advice, but back it up with wholesale support.

What about the future?

Whatever the broader macro effects, it's clear that the biggest winner from the credit super-cycle was the banking industry itself.

Profits of the global-listed finance sector increased by 14 times from 1990 to 2007. Earnings in the finance sector handsomely outpaced non-financial sectors: from 1990 to 2007 non-financial sector earnings increased sevenfold.

This meant that finance-sector earnings accounted for an unprecedented share of total listed-sector profits - over one third of total earnings at the peak.

The finance sector was the most important contributor to the rise in profit shares of GDP to all-time highs in most developed economies.

If we believe in recovery, then despite a recent rally, banks must play a role in the future - so maybe HSBC, Barclays, Deutsche Bank and BNP Paribas should be worthy of more than a cursory glance.

I would love to have included RBS, but I would rather miss the first 25% rally knowing the government was truly supportive.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.