Bankers To Get Bonus

[keyboarder]

the bonuses relate to the year to April 2008, before the meltdown that occurred in September when Lehman collapsed. Up until that time, many banks were actually doing quite well

 

But they weren't really were they? That's the point. The toxic debts were not all accumulated in the few months up to september of this year. The greed and the astronomical rewards going on in the city beggars belief.

[Mr. Sausages]

Perhaps the bonuses were based on their ability to hide it from the media.

[Lee54]

At least the Germans got their priorities right. http://business.timesonline.co.uk/tol/busi...icle4961516.ece

[manshimajin]

If you read it carefully, you will see that the bonuses relate to the year to April 2008, before the meltdown that occurred in September when Lehman collapsed. Up until that time, many banks were actually doing quite well, and many staff would have earned bonuses.

 

As others have said, it may be a different matter in the year to April 2009.

 

S

But do they have the money to pay these bonuses now? If they do, why are so many banks asking either shareholders or governments to supplement their capital and liquidity positions? If they have money to pay bonuses, which are a long way down the list of obligations (ie after their obligations to clients, debtors, shareholders and staff salaries) presumably they don't need bailing out.

 

A few banks have strong liquidity so they can choose what they do. But I would have thought that the chastened financial regulators would be far from happy to see that those banks that are seeking liquidity through injections of public/taxpayer funds are planning to use their scarce capital to pay bonuses (or buy shares for the bonus scheme) - however long ago the outstanding bonuses relate to.

 

And at a practical level how many staff are going to leave at present because they were not paid a bonus?

[Celt]

I worked for a company for many years, part time actually, and were given shares as a bonus, which was common. As i believe happens in many companies.

 

The said company changed hands and i got X amount of money. My transfered shares are still there and i receive X amount of money, annualy, because off it.

 

So, Lee, you're talking shoite. It's common practice. I'm not a banker, maybe a wanker but not a fat cat

[manshimajin]

I worked for a company for many years, part time actually, and were given shares as a bonus, which was common. As i believe happens in many companies.

 

The said company changed hands and i got X amount of money. My transfered shares are still there and i receive X amount of money, annualy, because off it.

 

So, Lee, you're talking shoite. It's common practice. I'm not a banker, maybe a wanker but not a fat cat

Celt you right, it is very common practice but I think the question is whether the banks should give extra shares as bonuses at the present. Shares don't just spring out of nowhere. One way or another to pay the quoted billions in bonuses these have to be paid for whether they are in cash or shares.

 

Imagine the boot is on the other foot. A company rated as high risk by the bank and the stockmarket goes to its bank for a cash bail out. It wants this to maintain its liquidity and its ability to keep trading. The bank finds out that the company has significant funds set aside to pay bonuses. Given the risk profile of the company would the bank be handing it extra money or woud it be saying first of all you need to use that cash you have to demonstrate a willingness to take tough decisions in order to save your company? "we are not a charity" seems to be a bank mantra - and a good one too.

 

Some banks will still be OK financially and they can decide how to handle bonuses. Those that are cap in hand to the taxpayer might stop to think about the PR impact of what they are doing and how they would deal with their own borrowers in the same situation.

 

If they do anything wouldn't options (say realisable subject to agreed performance in 5 years time) be much better as they are based on future achievement and don't cost money today - which is exatly what is needed now?

[Lee54]

If you were a share holder in one of the Banks and were told sorry your not getting a dividend this year because any spare money will be going out in bonuses what would you do. The money that the Banks have is not their money its private funds and taxpayers

[Slim]

If you were a share holder in one of the Banks and were told sorry your not getting a dividend this year because any spare money will be going out in bonuses what would you do. The money that the Banks have is not their money its private funds and taxpayers

 

You're over generalising, as usual. For example, HSBC posted a 12.2 billion pound profit this year. The money the government is providing to many of these banks isn't a gift, it could well be returned and make a profit, and it isn't to shore up profits or being used to pay bonuses. The money is either to increase Tier 1 capital because the government has insisted that the banks are required to hold more, and to enable inter-bank lending because mistrust has frozen that market.

 

Do you understand any of this?

[Sebrof]

If you were a share holder in one of the Banks and were told sorry your not getting a dividend this year because any spare money will be going out in bonuses what would you do. The money that the Banks have is not their money its private funds and taxpayers

 

 

OK, Lee, WHICH bank has received government money, and is not paying a dividend, and is still paying bonuses which it is not legally obliged to pay?

 

S

[manshimajin]

OK, Lee, WHICH bank has received government money, and is not paying a dividend, and is still paying bonuses which it is not legally obliged to pay?

 

S

Sebrof, you sound a bit like a banker! Let me not come between yourself and Lee54 on this one.

 

My position is that I don't have a 'blanket' disagreement with bonus payments:

 

I have no argument with banks that have sufficient capitalisation and liquidity such as HSBC or the Australian banks doing this. Hopefully they will include Group as well as personal performance as one of the elements used to calculate the quantum of the bonus. Indeed it would be great to see all banks in a position where their balance sheets were strong and their market value high so they could pay appropriate bonuses - but this does not seem to be the case at present.

 

If banks that have asked for additional emergency liquidity from either their shareholders or the taxpayers of the legislature they are based in plan to go ahead with big bonus payments it fundamentally looks like poor PR. In the UK they are sending clear messages through LIBOR that they still don't have confidence in each others loan books.

 

Are you saying that HBOS, RBS and B&B should be paying bonuses this year after they have destroyed shareholder value and asked for financial supprt from HMG? Maybe the quote from Voltaire, appropriately modified, would be a good philosophy at present - "In England, from time to time, they do not pay bonuses to bankers, to encourage the others". Should the Icelandic Government agree to the banks there paying big bonuses to those people who brought in over target funds in 2007-2008?

 

Much better, if something has to be done, to offer a bonus that does not cost money today but will be worth something in a number of years time, if, and only if, challenging performance criteria are met. It would be interesting to see the 'legal obligation' tested against 'capacity to pay' in cases where banks have had to ask for additional support.

[Sebrof]

OK, Lee, WHICH bank has received government money, and is not paying a dividend, and is still paying bonuses which it is not legally obliged to pay?

 

S

Sebrof, you sound a bit like a banker! Let me not come between yourself and Lee54 on this one.

 

I'm not a banker, and I think many banks have acted disgracefully in the past few years.

 

My position is that I don't have a 'blanket' disagreement with bonus payments:

 

I have no argument with banks that have sufficient capitalisation and liquidity such as HSBC or the Australian banks doing this. Hopefully they will include Group as well as personal performance as one of the elements used to calculate the quantum of the bonus. Indeed it would be great to see all banks in a position where their balance sheets were strong and their market value high so they could pay appropriate bonuses - but this does not seem to be the case at present.

 

If banks that have asked for additional emergency liquidity from either their shareholders or the taxpayers of the legislature they are based in plan to go ahead with big bonus payments it fundamentally looks like poor PR. In the UK they are sending clear messages through LIBOR that they still don't have confidence in each others loan books.

 

Are you saying that HBOS, RBS and B&B should be paying bonuses this year after they have destroyed shareholder value and asked for financial supprt from HMG? Maybe the quote from Voltaire, appropriately modified, would be a good philosophy at present - "In England, from time to time, they do not pay bonuses to bankers, to encourage the others". Should the Icelandic Government agree to the banks there paying big bonuses to those people who brought in over target funds in 2007-2008?

 

Much better, if something has to be done, to offer a bonus that does not cost money today but will be worth something in a number of years time, if, and only if, challenging performance criteria are met. It would be interesting to see the 'legal obligation' tested against 'capacity to pay' in cases where banks have had to ask for additional support.

 

I certainly don't think any bank that is not in rude financial health should be paying discretionary bonuses. I am not a supporter of torture or capital punishment but in my dreams I would pay good money to watch Hornby, "Sir" Fred Goodwin, and Crawshaw (B&B) lowered slowly into a large vat of boiling oil. Along with the biggest villain, G Brown, who should be lowered more slowly.

 

Schadenfreude note. Crawshaw bought 375,524 shares in BB in February this year for 181.08p per share. They last traded at 20p.

 

Goodwin is a Chartered Accountant. Like another CA, "Lord" Simpson, who destroyed Marconi, he had led a fairly blameless life until he landed the top job. Then he went crazy.

 

G

[thesultanofsheight]

I certainly don't think any bank that is not in rude financial health should be paying discretionary bonuses. I am not a supporter of torture or capital punishment but in my dreams I would pay good money to watch Hornby, "Sir" Fred Goodwin, and Crawshaw (B&B) lowered slowly into a large vat of boiling oil. Along with the biggest villain, G Brown, who should be lowered more slowly.

 

I think it needs to get worse for these bankers. Those who have profitted from the last 10 years should be out on their arses pronto with not a chance of any bonuses. If they are as good as they say they'll find alternative jobs. Sadly most of them are wankers who have ridden the boom and other people are suffering because of their shaky lending policies. There has to be moral hazard for these people otherwise they'll do it all again and being bailed out by government and then being still allowed to profit via being given shares (at massively deflated share prices, which should appreciate hugely over time) is totally unaccceptable.

[Lee54]

C4 video

http://www.channel4.com/news/articles/busi...bonuses/2513372

[Chinahand]

Maybe the quote from Voltaire, appropriately modified, would be a good philosophy at present - "In England, from time to time, they do not pay bonuses to bankers, to encourage the others".

I have no idea how many people will get your reference to Admiral Byng, but all I can say is that I am certain the writers of Friends really missed a wierd dream sequence episode where Chandler ends up being shot pour encourager les autres!!!

[manshimajin]

I'm not a banker, and I think many banks have acted disgracefully in the past few years.

 

I certainly don't think any bank that is not in rude financial health should be paying discretionary bonuses. I am not a supporter of torture or capital punishment but in my dreams I would pay good money to watch Hornby, "Sir" Fred Goodwin, and Crawshaw (B&B) lowered slowly into a large vat of boiling oil. Along with the biggest villain, G Brown, who should be lowered more slowly.

 

Schadenfreude note. Crawshaw bought 375,524 shares in BB in February this year for 181.08p per share. They last traded at 20p.

Sorry to tar you with that brush!!! We seem to agree on not paying bonuses when a bank is in poor shape - I wonder if the banks agree? The worrying thing is that bonuses have been paid out for what is now being called 'toxic' performance. Grit one's teeth....

There has to be moral hazard for these people otherwise they'll do it all again and being bailed out by government and then being still allowed to profit via being given shares (at massively deflated share prices, which should appreciate hugely over time) is totally unaccceptable.

That's why I'd prefer to see some incentive based on getting the banking system right and then running it for 4 or 5 years properly before any shares are actually handed over - ie a long term incentive not a short term one. And the measures of being successful would be more than a little challenging and include risk minimisation and business quality standards. The principle of incentives is OK if managed properly. But they seem to have been thrown around like confetti.

 

It amazes me with the wisdom of hindsight that the Board Remuneration Committees of the banks seem to have fallen into the "growth is better than quality" trap. Actually does not say much about the basic business skills of the captains of finance represented on the Boards. There were a number of real examples of risk related bonuses leading to financial disasters in the banking sector to warn them. Next time round Blind Freddy and his dog may do a better job.