Banks To Pay Billions In Bonuses

[Terse]

LINK

 

The government is resigned to UK banks paying out billions of pounds in bonuses this year, despite its calls to curb the payments, the BBC has learned.

 

The best the coalition can hope for is a declaration from the banks that they will pay out less than they would have without government intervention, said BBC business editor Robert Peston.

 

There are also questions about any declaration by the banks that they will make at least some concessions.

 

One senior banker told our correspondent there "could be more spin than substance" in any commitments the banks make to reduce bonuses.

 

 

Quite simply, it's wrong.

[gazza]

If they have made the bank cash and pulled them arund a bit, then cant see a problem with it.

 

Its when there getting something for northing that its wrong

[La_Dolce_Vita]

I think the whole bank bonus thing is a media thing that just works to keep the public attention drawn to the trivial aspects of the financial crisis.

It matters more about how crisis happened, why it is allowed to happen, how the banks operate, etc.

But do you really think that bonuses should be given simply because of the cash that is made? Why not reward solely based on effort or the amount of work put in? Though if you did that you would have an utterly different system of bonuses. It wouldn't be the guys at the top dragging in the ridiculous amounts.

[Snaipyr]

I think the whole bank bonus thing is a media thing that just works to keep the public attention drawn to the trivial aspects of the financial crisis.

It matters more about how crisis happened, why it is allowed to happen, how the banks operate, etc.

But do you really think that bonuses should be given simply because of the cash that is made? Why not reward solely based on effort or the amount of work put in? Though if you did that you would have an utterly different system of bonuses. It wouldn't be the guys at the top dragging in the ridiculous amounts.

 

There was a big stink about this in Ireland before Xmas but didn't the Irish Gov react to public opinion by swiftly changing legislation to either curtail it, or tax bonus payments at a high rate? Could be wrong - I only half listen to Ireland's woes now after 2 years of doom and gloom of all sorts on RTE.

[Barrie Stevens]

I think the whole bank bonus thing is a media thing that just works to keep the public attention drawn to the trivial aspects of the financial crisis.

It matters more about how crisis happened, why it is allowed to happen, how the banks operate, etc.

But do you really think that bonuses should be given simply because of the cash that is made? Why not reward solely based on effort or the amount of work put in? Though if you did that you would have an utterly different system of bonuses. It wouldn't be the guys at the top dragging in the ridiculous amounts.

 

There was a big stink about this in Ireland before Xmas but didn't the Irish Gov react to public opinion by swiftly changing legislation to either curtail it, or tax bonus payments at a high rate? Could be wrong - I only half listen to Ireland's woes now after 2 years of doom and gloom of all sorts on RTE.

 

Bit different. Much of the bonus comes from peope who trade and play the derivitives markets rather than retail banking.

 

The dealers make the money out of a blank screen. So, they get a bonus (Or the sack)

 

If no bonus they move on and another bank gets their abilities.

 

Pay the bonus or lose the bank. Better still split them up as is happening.

[Cambon]

Pay the bonus or lose the bank. Better still split them up as is happening.

 

Apparently, less will be paid in bonuses this year than last because the bankers have opted for 20-40% pay rises as that will be taxed at a lower rate than bonuses. So, bankers 1, government 0.

 

Split them up? Do you really think that is happening? Even with Lloyds and RBS, the government has too much to lose. The banks are far too big and important to the economy to risk breaking up. They argue it will increase competition, but the competition will be from foreign banks, so it will effectively be more money going overseas.

 

Better to keep on bashing the banks and keep the dumbed down society in the dark about the real cause of the crisis - bad governments.

[thebees]

What is money? Its a mess, that is what it is.

[Bobbie Bobster]

I think the whole bank bonus thing is a media thing that just works to keep the public attention drawn to the trivial aspects of the financial crisis.

It matters more about how crisis happened, why it is allowed to happen, how the banks operate, etc.

But do you really think that bonuses should be given simply because of the cash that is made? Why not reward solely based on effort or the amount of work put in? Though if you did that you would have an utterly different system of bonuses. It wouldn't be the guys at the top dragging in the ridiculous amounts.

 

There was a big stink about this in Ireland before Xmas but didn't the Irish Gov react to public opinion by swiftly changing legislation to either curtail it, or tax bonus payments at a high rate? Could be wrong - I only half listen to Ireland's woes now after 2 years of doom and gloom of all sorts on RTE.

Twas the Irish banks that they targeted, who they mostly own. In the UK its more multinational banks who bring in more tax by having the bonus earning business there, rather that relocating to somewhere else with no restrictions on bonuses.

 

Also, according to R4, basic salaries have gone up by 20-40% in the sector to offset bonus nonpayment risk.

[Stu Peters]

I have no real knowledge of how thse things work so am certainly not posting as an expert, more a working Joe looking for answers.

 

Seems that every time anyone talks of cracking down on the banks, we get the excuse that they'll relocate elsewhere, or lose their key staff to competitors, or whatever.

 

So surely what it needs is the UN (or some other international government organisation) to pass laws that banks can't declare bonuses until their debts are repaid (in this case to the taxpayers who funded the bailout) and they're operating within the terms of their 'performance licence' which should include all the important stuff like maximum interest charged above base, ratio of lending vs. deposits - a code of conduct if you will.

 

It seems that the world is in thrall to the veiled threats of these masters of the universe, and if it takes a concerted international legislative effort to bring them into line, then so be it. Obviously the politicians will resist this, citing a preference for 'free market forces' and looking after their friends in high (financial) places...but I'm bloody sure it would guarantee re-election for those who pushed it through. The moneylenders have taken over the temple, cleaned us all out, plan to keep giving us one via the tradesmen's entrance and need to be nailed.

[Bobbie Bobster]

I think the relocation card is overplayed, and I've heard this point made by a number of commentators recently. However, and I may have misunderstood this morning, being half asleep, the emphasis seems to have changed a bit from "the banks will have difficulty retaining staff and London will become less attractive to work in" to "the banks will relocate".

 

Unfortunately there is currently no such supra-national legislative body, and other countries would be quite eager to get their hands on the lovely corporation tax and other indirect taxes that would arise from a big investment banking operation.

[DRIVER]

Well if they are not happy why don't they all come over here, plenty of empty flats an apartments

[Bobbie Bobster]

Well if they are not happy why don't they all come over here, plenty of empty flats an apartments

 

Empty flats and apartments - check

Good interweb for screen trading - check

Low tax - check

Ferrari/aston/porsche dealership - hmm

Gucci/Armani/boss outlets - well...

5* hotels and "name" chef restaurants - let's forget it.

 

Not that I care for these fripperies, but Mr or Ms Average Investment Banker does. Else how can they spend their huge bonus?

[wrighty]

For me, the idea that the 'talent' that work for the banks will go elsewhere if they don't get a 7 figure bonus is ridiculous. There is no 'talent'. Anybody can turn money into more money during economic growth. Everybody loses money during an economic crash. Doesn't matter how 'talented' they are. Lucky is a better word.

 

I'm not an economist, but I have done a little reading on the subject. A couple of things that I read stick in the mind.

 

Firstly, a bunch of professors of economics at Harvard or somewhere similar did a little experiment. They played the stock market in 2 ways. One arm of the experiment was to use their skill and judgement to choose which stocks to buy and sell. The other arm of the experiment was to choose them by throwing darts into the listings page of the Wall Street Journal. Darts won.

 

Secondly, according to the well regarded book 'The Black Swan', on days of economic crashes (Black monday, Black Wednesday etc), more 'money' is 'lost' in a day, than has been accrued over the previous x years of growth.

 

So, the banks are deluding themselves if they think they have to pay huge bonuses to keep 'talent'. Bankers should get paid a salary, and if they don't like it someone else will do the job and have just as much chance of doing as well (or as poorly).

[Cambon]

So, the banks are deluding themselves if they think they have to pay huge bonuses to keep 'talent'. Bankers should get paid a salary, and if they don't like it someone else will do the job and have just as much chance of doing as well (or as poorly).

 

That is a nice theory, but it is not the way it works. For example, if you had been seeing a certain dentist for several years and liked that dentist and the work he did, but he then moved to another practice, would you follow him or take the risk on the new dentist being as good? Bankers and investment advisors tend to have a following. Paying the bonus is as much about keeping the following as it is about the banker. So, either pay the banker the £1,000,000, or risk losing him and his £1,000,000,000 worth of clients.

 

The government is caught between the devil and the deep blue sea. While labour were in power the condems were bashing the banks. Now that they are in power labour are bashing the banks. At the end of the day, up to 50% of that bonus money will be paid in tax that the government cannot afford to lose. However, that is insignificant compared to the billions they could lose if the bankers take their clients elsewhere.