Bank Bonus Tax

[bellyup]

Any proof to your claim SoreBelly?

 

Besides who would of thought it deposits down during a recession? Who would of thunk it?

 

Good dog - i mean good try enjoy life in cloud cookoo land and dont forget to pooper scoop

[Amadeus]

Any proof to your claim SoreBelly?

 

Besides who would of thought it deposits down during a recession? Who would of thunk it?

 

Good dog - i mean good try enjoy life in cloud cookoo land and dont forget to pooper scoop

You haven't answered the question - any link to figures or something?

[bellyup]

Any proof to your claim SoreBelly?

 

Besides who would of thought it deposits down during a recession? Who would of thunk it?

 

Good dog - i mean good try enjoy life in cloud cookoo land and dont forget to pooper scoop

You haven't answered the question - any link to figures or something?

 

From the FSC website

 

MOVEMENT IN ISLAND’S DEPOSIT BASE - F.S.C Press Release

 

Deposits (net of local inter-bank placings) with Isle of Man offices of Isle of Man licensed deposit takers

 

Deposits decreased by £0.39 billion (-0.73%) to £52.70 billion between 30th June 2009 and 30th September 2009.

 

Deposits in the year to 30th September 2009 decreased by £1.20 billion (-2.23%) on the corresponding figure as at 30th September 2008.

[Albert Tatlock]

From the FSC website

 

MOVEMENT IN ISLAND’S DEPOSIT BASE - F.S.C Press Release

 

Deposits (net of local inter-bank placings) with Isle of Man offices of Isle of Man licensed deposit takers

 

Deposits decreased by £0.39 billion (-0.73%) to £52.70 billion between 30th June 2009 and 30th September 2009.

 

Deposits in the year to 30th September 2009 decreased by £1.20 billion (-2.23%) on the corresponding figure as at 30th September 2008.

Hardly surprising in a full scale credit crunch IMO: business owners need to use extra cash for businesses to survive; savers/investors using spare cash to buy property/businesses at their cheapest/discount for a long while; poor interest rates and money movements to obtain better interest rates elsewhere; buying gold; £ losing value and buying foreign currency, and resultant intra-country money movements - are just some of the very many reasons - usually far more evident in such a sorry state of global financial affairs.

 

Not necessarily a reflection of a drop in confidence with the island and its' institutions, though with recent events it would be naive to suggest there is not an element of that, though most likely that is only a tiny element of these figures.

 

Edited to add: Plus, doesn't this drop include most of the assets of KSF itself too, transferred on the order of the UK treasury in October 2008?

 

 

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[manshimajin]

There was an interesting discussion on the Beeb this morning about the impact of the bonus tax.

 

The person speaking 'against' the tax and its impact on the City of London said that he did not know any bankers who had left and that he, as a City solicitor, would not advise banks to relocate to other G20 countries because the conditions would be similar. He also pointed out that most of the people talking about relocating are hedge fund managers who are not affected by the bonus tax. His argument was based on growth and 'international competitiveness' of the UK banking sector.

 

The other speaker was expressing concern that in the short term many UK banks are desperately short of their own capital (ie non-taxpayer capital) and that any bonus system to encourage them to expand business and to increase risk will require additional capital injections. Long term he felt that there is a maximum size that the potential financial liabilities (through the banking sector) of a country need to be. On this basis he felt that maybe some shrinkage of the size of the UK bank sector might actually be a good thing for the long term economic health of the UK. He would much prefer to see the UK banks retain profits for capital rebuilding.

 

Made me wonder - is there a sensible level of deposits that we should retain on the Island? To some extent this depends on how tight our finance regulations are; but is there also a 'risk' factor that needs to be considered by the government in case of any future economic crises? Should the government be saying on behalf of the electorate - 'we are willing to take this much risk' but not more than that?

[Cambon]

The problem all of the banks have with this tax is not the tax itself. It is the raid and grab attitude. The bedrock of the UK banking system has always been a stable tax regime. But when a government comes along with a cavalier attitude like this lot, it makes the bankers wonder what will be raided next?

[La_Dolce_Vita]

Wait a minute, multi-national corporations should be used to 'raid and grab'. Whenever many of these organsiations get in any bother they abandon the free-market principles they profess to uphold and are prepared to grab as much money from the public as they can to keep themselves going.

 

I can't remember the figures now but a very large number of multinationals have received massive subsidies or bailouts from the government.

[manshimajin]

But when a government comes along with a cavalier attitude like this lot, it makes the bankers wonder what will be raided next?

This makes one think of chicken and egg. The problems the banks are experiencing are very largely self-inflicted.

 

When many major banks are fundamentally bankrupt, are dependent for their survival and jobs on taxpayer capital and are diverting profit from rebuilding their balance sheets, it could just be that they need a reminder of their responsibilities if they are unable to act wisely themselves.

 

Even those banks that have 'survived' without taxpayer capital are benefiting from it. Imagine what would have happened to Barclays and HSBC if RBS, Lloyds and HBOS had been allowed to go belly-up. One suspects that when it comes to cavalier attitudes the banks might just take a quick peep in a mirror.

 

The 'bonus culture' was not needed 20 years ago. It is very much a reflection of the American business culture of 'at risk' remuneration. And now we have that strange beast called a 'guaranteed bonus' that seems to have little relationship to 'at risk' performance or to 'capacity to pay'.

[Cambon]

This makes one think of chicken and egg. The problems the banks are experiencing are very largely self-inflicted.

 

When many major banks are fundamentally bankrupt, are dependent for their survival and jobs on taxpayer capital and are diverting profit from rebuilding their balance sheets, it could just be that they need a reminder of their responsibilities if they are unable to act wisely themselves.

 

Even those banks that have 'survived' without taxpayer capital are benefiting from it. Imagine what would have happened to Barclays and HSBC if RBS, Lloyds and HBOS had been allowed to go belly-up. One suspects that when it comes to cavalier attitudes the banks might just take a quick peep in a mirror.

 

I am not sure if it is chicken and egg, or pot calling the kettle black. Look at the Lloyds rights issue in progress as we speak. The government wanted them to join the asset protection scheme. Lloyds said no so the goverment plucked a figure from teh air and said we will charge you £2.5 BILLION for the privilage of not going into the scheme.

 

All this "bailed out with the tax payers money shit is literally that - shit. The government had a choice of 3 things they could do. A - buy into the banks and make money as the market rises. B - let them go into foreign owership like HSBC, etc. of C - let them go bust and bail them out properly at an extremely high cost to the tax payer.

 

Mark my words. Come next spring, the three state sponsered banks will suddenly start doing well as the run up to the general election takes hold, and the government stops interferring.

[La_Dolce_Vita]

When many major banks are fundamentally bankrupt, are dependent for their survival and jobs on taxpayer capital and are diverting profit from rebuilding their balance sheets, it could just be that they need a reminder of their responsibilities if they are unable to act wisely themselves.

But this is the problem. We live in a nationalist, corporate dominated mixed economy, and not a capitalist one. In reality should be made to operate as if they have a responsibility to take risks responsibly. This does run counter to capitalist theory, but again, we don't really live in a capitalist society.

 

Even those banks that have 'survived' without taxpayer capital are benefiting from it. Imagine what would have happened to Barclays and HSBC if RBS, Lloyds and HBOS had been allowed to go belly-up. One suspects that when it comes to cavalier attitudes the banks might just take a quick peep in a mirror.

They couldn't have been allowed to go belly-up and they know this. We are so dependent on the banks that their collapse would have devastated the economy. They deserved to go bankrupt, however. They should have ended their existence under the very same principles they professed to uphold. But these large corporations know that they can get subsidies and in the case of banks would know they would have to receive some/much support from the government.

 

The 'bonus culture' was not needed 20 years ago. It is very much a reflection of the American business culture of 'at risk' remuneration. And now we have that strange beast called a 'guaranteed bonus' that seems to have little relationship to 'at risk' performance or to 'capacity to pay'.

Why are tieing in the bonuses so closely with risk. You seem to be given the impression that the problems of the banks risktaking is due or largely related to the bonuses.

[manshimajin]

All this "bailed out with the tax payers money shit is literally that - shit. The government had a choice of 3 things they could do. A - buy into the banks and make money as the market rises. B - let them go into foreign owership like HSBC, etc. of C - let them go bust and bail them out properly at an extremely high cost to the tax payer.

 

Mark my words. Come next spring, the three state sponsered banks will suddenly start doing well as the run up to the general election takes hold, and the government stops interferring.

In the capitalist world Option C was the real one to go for - so definitely there would have been none of the "saved by the taxpayer shit".

 

IF the UK government had not offered a guarantee one of a few things would have happened for sure:

• Deposits would have gone off to countries with guarantees,
  
• UK banks would have had major runs on their deposit base and been bankrupted,
  
• Banks would have been forced to simplify their businesses operations and sell their commission/fee businesses,
  
• The very few internationally solvent banks might have been able to buy UK banks (if they thought it a worthwhile risk for their shareholders?),
  
• RBS instead of being worth 3% of what it was would have been worth 0%
  

One can only hope that your forecast will come to pass and that there will be a very significant increase in value of the taxpayer stakes in the banks in the next 6 months. Something is needed to fix the almost Greek-like financial situation of the UK.

 

In terms of the UKG interfering in banking - I recall that people in the insurance industry said much the same back in the late 80s early 90s when the FSA started to show its teeth. Problem was that the promise of 'self-regulation' didn't work then and sadly does not seem to have worked now (in both cases driven by greed). When you get in a mess, to paraphrase Jim Collins, don't go flayling around blaming everyone else but yourselves - look in the mirror and work out what YOU did wrong as a manager.

[Cambon]

Agreed mainly, but the government are interfering with the day to day running. THey need to remember they are not bankers.

 

Selling defunct banks would not be a problem. The likes of Tesco, M&S, Asda, Virgin, etc. are desperate to get into banking. However, the government made it quite clear last year prior to the Lloyds/HBOS merger they engineered, that they want four banks. They have three and a building society. They will struggle to keep any hold on Lloyds. As soon as this rights issue is out of the way the price will shoot up and there will be great pressure on the government to start offloading stock.

[manshimajin]

Someone showed me an article from yesterday's Guardian that looks into the value created by different types of job.

 

According to the report

Waste-recycling workers create £12 of value for every £1 they are paid,

Hospital cleaners - £10 of value for every £1

Tax accountants - minus £47 for every £1

Investment bankers - minus £7 for every pound.

 

I understand that the evaluation of investment bankers takes into account the economic activity they generate, tax contributions, job creation but also their negative impact on public finances and their contribution to the massive destruction of value in banks.

 

I am not convinced by the methodology but I think there is still an important point. If banks have had their capital bases destroyed by their actions they should rebuild this before splashing money around trying to retain staff who should be replaceable through internal succession. We used to be told that nobody was indispensible.

 

I wonder what the average period was pre-crash that a 'top' investment banker stayed with one institution before seeking more money elsewhere ? Did high bonuses make them stay or encourage them to keep on moving for more money? From the way some of them talk one is given to believe that they were constantly being chased by headhunters and on the move. In which case the big bonus culture did not actually work as a retention strategy as is being claimed by advocates of the big bonus culture in the City of London.

[La_Dolce_Vita]

Agreed mainly, but the government are interfering with the day to day running. THey need to remember they are not bankers.

Aside from your thoughts on the forms that must be taken in offloading the risk that has been placed onto the taxpayer back onto the bank, if that is even possible, the government does have to get involved far more with the banks and finance industries operations. Liberalisation was a big mistake.

[manshimajin]

When you destroy so much value in a sector that is supposed to be critical to the economy is it any wonder that the government gets involved. If the bankers didn't want interference they should have done a better job in the first place.