Sebrof Posted October 20, 2008 Share Posted October 20, 2008 I have been thinking about this Crawshaw character, ex-CEO of B&B, who paid two thirds of a million squids from his own pocket for a heap of shares in B&B in February THIS YEAR. Exactly twelve months EARLIER, I got my relations to extract deposits from B&B because it was so obvious that they would soon be in dire trouble. What this means is that this highly paid executive was inhabiting a parallel universe. He'd been making all these dodgy loans, and despite warnings going back to 2003, he thought that property prices would rise for ever. And he wasn't alone. I would rather believe that he was cynically feathering his own nest, but in fact it seems that he really had no idea at all of what was going on. And he was the boss. It's quite frightening. S Link to comment Share on other sites More sharing options...
WTF Posted October 20, 2008 Share Posted October 20, 2008 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 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. how many bankers out there would be happy with shares in a company they KNOW is all smoke and mirrors?? they all want cash now while they can get it. these recently nationalised banks that the government want to sell will never be sold at what they claim is market value. shares in banks are as much use to investors as the war bonds were. Link to comment Share on other sites More sharing options...
ai_Droid Posted October 20, 2008 Share Posted October 20, 2008 how many bankers out there would be happy with shares in a company they KNOW is all smoke and mirrors?? they all want cash now while they can get it. these recently nationalised banks that the government want to sell will never be sold at what they claim is market value. shares in banks are as much use to investors as the war bonds were. That's the point. Give them shares instead of cash so that they have a long term incentive in the success of the bank and move them out of risky short term bonus chasing ventures. Link to comment Share on other sites More sharing options...
Sebrof Posted October 20, 2008 Share Posted October 20, 2008 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 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. how many bankers out there would be happy with shares in a company they KNOW is all smoke and mirrors?? they all want cash now while they can get it. these recently nationalised banks that the government want to sell will never be sold at what they claim is market value. shares in banks are as much use to investors as the war bonds were. And exactly what is it that "they claim is market value"? Market value is no more than the current share price. Perhaps you meant intrinsic value. I'd hazard a bet that in five years time, Lloyds shares will be at least twice what they are now. S Link to comment Share on other sites More sharing options...
WTF Posted October 20, 2008 Share Posted October 20, 2008 how many bankers out there would be happy with shares in a company they KNOW is all smoke and mirrors?? they all want cash now while they can get it. these recently nationalised banks that the government want to sell will never be sold at what they claim is market value. shares in banks are as much use to investors as the war bonds were. That's the point. Give them shares instead of cash so that they have a long term incentive in the success of the bank and move them out of risky short term bonus chasing ventures. the point is that in the long run, all banks are smoke and mirrors, they all lend to people they know won't be paying back, but aslong as in the meantime they get wages and bonuses they don't care.( why would anyone lend to african countries and expect to get it back?? ) there is far more dept than there is assets, and there will always be. the money banks would have you believe they make is all on paper, no real substance behind it, every depositor could not go into a bank today and withdraw their deposits, even with a 3 or 6 month wait. a few could, and then there is a run as people panic when they hear of money moving out then the bank is bankrupt and the slowest loose out. the whole system is a juggling act between investors and borrowers and aslong as there are enough funds coming in to cover cash out, it looks like it works. when the funds aren't coming in the banks borrow from banks that have cash coming in!! if you look at banking as ONE big bank, it obviously can't work. they just have the system so sub divided that they can make any part look flush with money on paper. how long do you think the 'economy' would last if NO ONE banked anything and just worked in cash or trade?? how many bankrupt loan sharks do you hear about?? they work because ( illegally ) because it is all cash based, no IOU's or 'banking system' as it is refered to in our world. Link to comment Share on other sites More sharing options...
manshimajin Posted October 20, 2008 Share Posted October 20, 2008 That's the point. Give them shares instead of cash so that they have a long term incentive in the success of the bank and move them out of risky short term bonus chasing ventures. No don't give them shares now. It costs the company money to buy them on market and they can go out and sell them short term if they want to. So shares do not necessarily act as an incentive. Even if they sell at a loss they've still made money as they have not paid for the shares themselves. Give them options to buy shares in 5 years time at say 4 to 5 times the current abyssmal market value. That will set some goals to outperform that target. Make the options execriseable subject to some real value adding achievements to ensure financial risk is covered. That way you set a longer term performance goal that will reward good behaviour over the next 5 years and don't end up using capital today. Board remuneration committees need to think of the impact of their decisions on taxpayers and shareholders as well as on staff. Bye the way more evidence that some bankers really are wallies - traders in the Caisse d'Épargne in France bet on derivatives after the Crédit Agricole messed up on them. Mind you they only lost €600 million... French Follies This was despite regulatory instructions not to use derivatives. Madame Guillotine please.... Link to comment Share on other sites More sharing options...
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