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Should Lloyds pay a bonus?

Robert Peston | 15:40 UK time, Friday, 6 February 2009

On 13 October, after receiving significant financial support from taxpayers, Lloyds TSB said this: "Although they will be entitled to take cash as an alternative, Lloyds TSB will ask executive directors to receive their 2008 bonus entitlement in Lloyds TSB shares. These will be subject to a restriction on sale until December 2009."
 
In other words, the board of Lloyds - which is now called Lloyds Banking Group - expected to pay substantial bonuses to the bank's most senior executives in respect of their performance last year.

Lloyds advertisementThere are five of these executive directors, led by the chief executive, Eric Daniels. And their aggregate entitlement to bonuses will run to millions of pounds.

As of now, Lloyds still intends to pay this bonus.

However, Lloyds' board has a few weeks to decide whether to press ahead. What should it do? Should Lloyds' executive directors be paid a bonus?

The executive will feel they have earned it - in that the financial performance of Lloyds TSB, before it bought HBOS, was quite a lot better than that of many other banks.

Also, Mr Daniels and his team will feel they've already made a sacrifice, by agreeing to take the payment in shares that can't be sold for a year rather than in ready cash.

But paying any bonus in any form to any banker right now is contentious, to put it mildly (see my assorted notes of the past couple of days).

And at least one reason for not paying the bonus to Lloyds' directors is that the bank's recent share price performance has been lamentable. As I've pointed out many times, it's tricky to pay fat rewards to managers of a business when the owners of said business are being mullered.

That said, part of the explanation for Lloyds' weak share price is that it recently bought HBOS, which has been incurring horrible losses on loans to companies and is expected to suffer further as mortgage borrowers run into difficulties.

Lloyds would argue that it was doing the world a favour by effectively rescuing the battered owner of the Halifax.

But Lloyds didn't buy HBOS as an act of charity, even though it was encouraged to do so by the prime minister and the Treasury. Eric Daniels expects to make good profits out of HBOS in years to come. 
 
So if the City has become nervous of the risks in turning HBOS around, then it might be sensible for Mr Daniels and his team to show restraint on pay and cancel their bonuses for 2008 - in the hope and expectation that they can prove in years to come that their confidence in the benefits of the takeover were well-founded.
 
Oh, and then there's dirty, grimy politics.
 
Taxpayers own 43 per cent of Lloyds, via the state's shareholding which is managed by UK Financial Investments.

Although that's not majority control, it's big enough to veto any substantial decision that Lloyds might want to take. So if Lloyds' board decides to pay substantial performance-related wonga to Mr Daniels and his senior team, that puts on the spot those who are looking after the taxpayers' shareholding.

Which means, as if you needed telling, that the prime minister - who made his reputation in the early 1990s as the scourge of the so-called "fat cats" - will have to decide whether Eric Daniels and his team deserve a few million pounds of bonus.

The partial nationalisation of the banking system is generating all sorts of intriguing new challenges for government.
 

Comments

Page 1 of 4

  • Comment number 1.

    dump 'em like a sack of potatoes
    build replacement uk institutions

  • Comment number 2.

    This bonus culture from management upwards to boardroom is crazy - it is the workers/braves doing the work, meeting deadlines/sales/targets that are the ones whou should get some recognition.

    Some managers have no idea what it takes to get the job done and create unrealistic targets/deadlines and in meeeting those deadlines get 10%+ bonus whilst the worker gets nothing.

    With the banks now part owner by the government and joe public, they should not get a performance related bonus for the short term target they met especially when long term it is unsustainable - wrt Credit crunch/toxic loans/etc.

    Anyway, hasn't the goverment got a bad bank in Northern Rock?

  • Comment number 3.

    FAO: HunkieDunkie

    Re our little RBS Share Price wager from a couple of weeks back - just drop 3 of your finest pounds into the next charity tin you pass by and we'll call it quits...


    As for the bonuses, their share price pre-merger fell just like every other bank, affecting thousands of pension pots just like every other bank.

    No bonuses in the banking sector are justified during this period of uncertainty, but the government do not have the strength to stand up to the banks and tell them this.

  • Comment number 4.

    Many business people who have sat across the table from a funding bank or venture capital player will no doubt have experienced the accusations of shamefulness and outrage that have greeted any management team expecting a pay rise or bonus in the midst of sub-target performance. The fact the banks are not just ignoring the taxpayers but now being so hypocritical would not be credible but for its actually happening.

  • Comment number 5.

    Robert I think you know what the sentiment is on your blog: No bonuses, full stop.

  • Comment number 6.

    I can't pretend to know enough about the details of Lloyds' finances to judge this particular case. I know the question is complex, but my prejudiced view is that bonuses look and smell bad to those of us who, working hard on lower earnings, are financing payouts to the rich.
    Nevertheless, I'm not comfortable with the idea that bonuses shouldn't be paid to those running companies whose share prices have fallen. Market sentiment is fickle at any time, and has been swinging from irrational exuberance to blind, indiscriminate panic for years. To reward directors for rising share prices when investors were over-optimistic was mad - but it would be no more rational to punish them because the same herd are now negative.
    Share prices are no guide to anything.

  • Comment number 7.

    Stop messing about worrying about what to do with these bonuses.

    Given the damage the financial sector has caused, just legislate for a 95% tax on all bonuses over £2000 in the financial sector.

    Then get on with staving off the depression. Print money, lend directly to businesses, get on with public works (infrastructure, housing etc). It's really starting to get urgent now!

  • Comment number 8.

    It's an easy decision for me even as an ex LTSB employee. None of the UK Banks should pay bonuses to management of any grade. The bankers need to show some contrition. They have lost small shareholders and large alike a lot of money. Similarly they are paying nothing on savings accounts and millions of ordinary people are struggling to make ends meet, so why should they still be cossetted.

    Final point Robert. Lloyds may argue that they were better positioned than most but they were still making big losses weren't they ?. Daniels was no more in control of his Corporate bankers than anyone else, he was just a bit luckier which is amazing considering he has an American at his right hand !!

  • Comment number 9.

    The purpose of a bonus is to retain the services of 'good' staff - how is it possible to argue that the staff at any bank are 'good'?

    Our pay rates need to be competitive in the global market for bankers. Quite apart from the problem that all of them are complicit in the global economic collapse one should also consider the Obama wage cap. So now UK ctotal ompensation packages need to be more than 350 K as that is all they could get in the US. So no bonuses and a pay cap seems most appropriate to me.

    Or as one company boss put it 'there will be no more buns pushed through the bars of your cage'. It is obscene to pay huge remuneration when their policies have quite literally stolen the widow's mite! (her savings)

  • Comment number 10.

    Interesting view of fiscal responsibility! If you're a bankster, you can lose money and expect to be rewarded; however, if you're a customer, you can expect to be evicted, bankrupted and potentially be on the streets.

    Obama was correct: screw down the maximum level of pay until it hurts. Yes, this is a form of revenge - but the maximum pay rate for banksters in the USA is still over 9 times what I can expect to earn.

    Any argument that these people are the finest minds and need to be paid accordingly is just so much tosh. If they were that good, we wouldn't be in this mess and they, like pigeons, could still leave a deposit on a porsche!

  • Comment number 11.

    Having had a lot of dealings with Lloyds TSB recently as a Business Customer I have to say that they are an excellent bank, displaying insight, caution and an entrepreneurial spirit, and that they are an excellent prospect for any investor.
    Their staff are motivated and excellent and the share price reflects the recent acquisition, which will stand them in good stead.
    They deserve to be rewarded well for their hard work, especially since the shares have been battered they need to be given a signal that they are appreciated.
    If anyone deserves a bonus, and a good bonus at that ....they do!

  • Comment number 12.

    Come on moderators !! or are you all in the green room ?

  • Comment number 13.

    No way!!

    They should not get any bonus and HMG should use its effective veto power. Bankers and their greed are mainly responsible for the mess we are in. It is a very bad precedent to reward such abject failure.

    We could all go down to Lloyds TSB and take our money out to show our displeasure. With interest rates at 1% I suggest that there is no point in lending money to banks. Drink it, spend it, put it under the mattress but dont lend it to banks.


    Thanks for asking Robert

  • Comment number 14.

    A key problem with renumeration packages has been their short-termism.

    Do a dodgy deal now, collect your bonus and then the deal blows up.

    If Lloyds got a good deal out of HBOS, this will become apparent in time.

    So there is no need for multi million pound bonuses this year.

  • Comment number 15.

    Nah... that era is over now, and they're too late. Bankers are a bunch of bunglers, and I can't make do with lower interest so they can get a gigantic bonus.

    I mean, look - banks are just a web sites with some IT attached to the backend. Can't anyone just buy a bank on the Internet and set it up? It can't be hard - the computer programs do all the work, so forget bonuses.




  • Comment number 16.

    Another dilution of shareholders assets, both public and private, no thanks.Were these people absolutely blameless (maybe not as greedy),don't think so.Are'nt they the people that agreed to keep Hornby on for a year at an astronomical salary?

  • Comment number 17.

    More nonsense. Nobody should be paid a FARTHING in ANY bank. NOBODY.

    It hardly matter that taxpayers own stakes, these are just the worst of the banks. But even HSBC / Barclays would have gone under if the BoE liquity schemes hadn't been carried out, which means that the risks associated with collapsing housing and commercial property markets now rest with us, the taxpayer.

    The sense of entitlement to a bonus is mind-boggling. And just because markets go through different cycles, some idiot at some desk has made money for SITTING there and now demands a bonus. Right now its the turn of the bond traders. But is the Quantitative easing succeeds as authorities fervently hope, inflation will return and there will be the mother of all bond market crashes. The bond traders will sheepishl say 'ok no bonus this year and fire a few of us'. But this thinking is simply nonsensical and this is exactly the kind of nonsense that resulted in teh credit traders being paid astronomical sums in teh last few years.

    Considering that most banks have lose their shareholders a DECADE of profits, it is fair to say that NO BONUS WAS EVER EARNED by ANYONE.

    Riding different cycles is hardly 'skilled' or 'talented' and as a taxpayer i would like to see these 'talented' ppl leave for their 'better jobs'.

    Lastly but MOST IMPORTANTLY, in the case of RBS / Lloysd, let's keep it really SIMPLE. Take 10 taxpayers or 100 or 1000 and ASK them if they would like their money to go towards ANY bonus for any employee. The taxpayers ARE the owners after all. Let's not forget, its all voluntary here and no one is forcing these 'talented' employees to work in these banks. They can like it or LUMP it.

  • Comment number 18.

    Enough.

    The iniquity of these bonuses stops now. RBS is crippled. No one except us, the UK taxpayers, will lend money to it. The money we’ve given it exceeds the total of all tax paid by it since 1998. We, the owners, are propping it up while it hemorrhages money. And the bankers want a bonus from the company. Because they’re worth it. And our politicians are more worried about the PR than the actuality.

    No. You bankers take a hit as an employee like anyone else. Stay and work your butt off to rebuild the company, and repay the taxpayer who is keeping you in a job. In no other “business” would the bits that make a profit be ring fenced for hefty bonuses when the company is effectively insolvent, the shareholders are wiped out and the taxpayer subsidises the loss making bit and takes on the risk of further losses.

    It is time as a society to decide whether we will tolerate this behaviour and do nothing. If you feel moved, please click on a link below to sign an e-petition to 10 Downing Street. Politicians apply a multiplier of several thousand to each signature. This is your chance to be heard.

    This one is a petition to stop the banks we are supporting paying bonuses. http://petitions.number10.gov.uk/Antidote/

    The other is to windfall tax the bonuses http://petitions.number10.gov.uk/Taxbankers/

  • Comment number 19.

    It seems that Gordon's workload is increasing by the hour. Well, he did insist on having the job of Numero Uno so he might as well get on with it!

  • Comment number 20.


    This is pathetic beyond belief. What's the point of teaching children any kind of values anymore? I give up.

  • Comment number 21.

    The best and the brightest were never in banks in the first place. The scary kid with half-inch thick glasses who stayed after school to help the lab technician so he could get access to dangerous chemicals is probably a professor at Cambridge or Harvard, and the nerd who hadn't seen sunlight since his parents bought him his first computer at the age of 3 is probably working for Apple or Microsoft. It's the kids who were always telling everyone how great they were who went into banking, and - no surprise - their self-promotion skills got them huge bonuses and they're not prepared to give them up just because they've run their banks into the ground.

    I won't comment on the politicians.

  • Comment number 22.

    I think we get it now Rob. Your last three blogs have just been echoing the thoughts your loyal posters have had for weeks.
    Its like your reading our homework back to us.

  • Comment number 23.

    Two factors that militate in favour of paying bonuses:

    1. is a corollary to the argument that they might otherwise leave. Surely it must be better for the economy to know that these bankers are safely confined within the Bank. Heaven help us were they to get loose amongst the last remaining bastions of Great British industry such as our whelk stalls or breweries.

    2. Careful analysis of the performance of the Salt and Grit futures desk may well identify one or two brave souls who staked their careers on the weather and should now be justly rewarded.

  • Comment number 24.

    No obvious geniuses at Lloyds, the HBOS 'takeoever' was served up on a plate by G.Brown, and then rammed down their throats when they were about to gag on it.

    Still, as you say, not as bad as some, who are lucky not to be looking at the inside of a jail, let alone wondering about bonuses.

  • Comment number 25.

    Pay bonuses? Absolutely not!!

    How utterly ridiculous! If the great leader and his sidekick chancellor allow bonuses to be paid it will go down like a lead balloon with the electorate! THis is particularly so, considering what is being said by the Obama administration in relation to banking executive pay.

    Have these idiots lost t complete touch with reality? We are living in a new economic era. The bankers have been caught with their pants down. The game is up and we all know it. Are they so stupid that they don't get it?

    I would say once the post office and other new companies fill the gaps that the banks have left we should desert the banks forever. They are still screwing every penny out of vulnerable people - exorbitant interest rates on credit cards for those who can least afford it; slashing interest rates for savers while charging borrowes percentages many times over base rate.

    Do the government and the bankers think that the British public are fools? Lets demonstrate to them that we are not! The public should march on the streets if the greedy nakers get a penny of taxpayers money to fund their bonuses.

  • Comment number 26.

    No, they should not get a bonus. I have had to sacrifice my dividend, whilst the government are getting 12.5% on our outlay. The bright sparks agreed to buy HBOS in a market where the asset book was dropping like a stone. I do not see why any bankers or civil servants should get a bonus. This should apply across the board. It is hardly as if there are lots of jobs for them to swag off to. The grim reality is that the savers and pensioners in this country are paying for everybody elses mistakes.

  • Comment number 27.

    These banking scum really are taking the Michael. Portable gibbets coming to the square mile soon.

  • Comment number 28.

    When will these people learn this country is sick of giving to the banks, we have gone into hock for the next 20 years because of them and now they want a bouns.

    If Flash really wants riots in the street he will pay these people just one share or one penny in bonus, either will light the blue touch paper.

    By the way Robert would it not be easier if you just printed a list of questions in one go, to enable Gordon to judge the mood, rather than dribbling it all out like this.

  • Comment number 29.

    Offer them shares, only redeemable a year after their contract ends. If the shares increase, fine, (unless the profits are false !)
    NO bonus and NO fancy salary
    These people need dragging into the real world. Politicians do to, but they are so far gone from reality that there is no hope with them, Broooon being the biggest culprit.

    We need an Election now.

  • Comment number 30.

    Boy are you a sucker for punishment! Twice in a day,

    Lloyds is a slightly different case but not that different.

    As the new LBG is being propped up by the taxpayer then no bonuses should apply across the board until they no longer need the support.

    Whilst it will surely be very unfair on most ex Lloyds employees, that taxpayers are propping up the new group cannot be overlooked.

    No one forced Lloyds to resuce HBOS (did they?) - if they hadn't then presumably overall the 2008 performance of the Lloyds group would have reflected their previous prudence.
    But the directors did and so delivered new company afloat only with taxpayer largesse.

    I would expect the staff to be very upset at Lloyds and grateful at HBOS. Sure they have internal processes to feedback their displeasure to their directors.

  • Comment number 31.

    Can you please cover something other than these wretched inept banks. There is more to business than banks. Or is the BBC now the Bank Broadcasting Corp.

  • Comment number 32.

    Robert,

    I had thought I’d wean myself off this blog but find I’m suckered in again. I had also thought I’d put paid to your use of the expression “Muller” in a polite way.
    Wrong on both counts: Mullahs are Islamic religious leaders just as Ayatollahs and Imams.
    May I suggest you stop using the term “Muller” with my, now, ruder directness?

    There used to be a time when every successful applicant to a job in a Bank could look forward to preferential mortgage acceptance and in-house rates. Also, even the new female tellers could smile exceptionally at clients whose bank finances that they had access to.

    If anyone thinks that is sexist, do a survey of the frontline m/f composition of tellers in local branches.

    With regard to the bonus situation, are not employees of the various banks in benefit from these preferential terms anyway, all the way up the tree?

    N.

  • Comment number 33.

    Why dont City banker boys make the tea?
    They've got peasants in the basement to do that.
    And besides, you dont get a bonus for making the tea.
    This lot need to come off their "golden pedestal" and join the real world.
    Everyone has had enough of their greed and ego.
    Who says that a banker who is just doing his job is worth any more than a doctor who is just doing his job?
    They recieve a "country estate" per year.
    Why dont the top 1000 workers in Tescos, an important and successful international company, recieve 5 million a year?
    Because that would be ridiculous.
    Bankers seem to think it's OK to help themselves to other peoples' money in bucketfulls, even if they have proved themselves to be useless.

  • Comment number 34.

    Dear Robert,

    I'm getting worried about the lack of breadth to your recent blogs.

    After having us vent our spleen over RBS and their bonus plans, you now throw the Black Horse to a river full of virtual piranhas, which can only have one result.

    So even though I am unlikely to see this post appear for another 90 minutes, during which time none of us are able to comment on anyone else's comments, I am no longer sure that I care since I confidently predict that 95% of posters will say NO THEY SHOULDN'T.

    Isn't there something more important that we should be discussing? I'd even rather talk about the effect of mixing heavy snow, ice and the no-risk safety culture on UK businesses, after all there's no buisness like Snow business!

  • Comment number 35.

    Look clearly people have got this bonus outrage all wrong. The bonuses should be much larger.

    One of the reasons bonuses are paid is to attract the best talent. Judging by recent performances banks are being run by those not up to the job so bigger bonuses are needed.

    There, simple isn't it? You just need to think clearly.

  • Comment number 36.

    They just don't get it do they???

    YOU AINT GETTTING ANY MORE MONEY!!!

    Please will someone bring this sector of industry to task and let them face some serious scrutiny:

    FRAUD

    DECEPTION

    DODGY ACCOUNTING

    MALPRACTICE

    LACK OF DUE DILIGENCE

    are the charges.

    I am further incensed that this is even up for debate. What world are these bankers living in!!!

    GO TAKE A HIKE GUYS!

  • Comment number 37.

    Dear Mr. Preston,

    In the blog below you paraphrase the arguments for paying a bonus thus.. No bonus = exodas of better staff. You then add..."If the Banks were staffed only by dunderheads and mediocrities - well, the bank could spiral into disastrous, irreversible decline"

    Have I missed something? I thought that the banks had already crashed, even with the better bankers on board. If we the taxpayer hadn't bailed them out, they would have gone bust.S o just how can the dunderheads and mediocrities do any worse than the wizz-kids?

    As for Lloyds -

    A) Bonuses to branch staff: unnecessary luxury. In a recession your average bank teller/manger, isn't going to quit because they haven't been paid a bonus.

    B) Bonuses to city traders: only those with an exceptional track-record i.e. those likely to be headhunted. No across the board payments.

    C) Bonuses to board members: Political suicide for the GVN. A big, big NO!!! Lloyds TSB may have been better run than the RBS, Northern Rock etc... but that's a bit like saying that Southampton are having a better season than Charlton, so the Saints boss should get a bonus. In fact, he got the sack, because Southampton have been performing poorly as well. Ditto Lloyds - After all, haven't they also written off billions in dodgy loans?

    As a guide, bank executives should only get a bonus, if operating profits (after write-downs) were up on the previous year and above city expectations. If either of these hurdles are not met, then there should be no bonus - not in cash, not in shares, not in tins of baked beans or anything else.

    And if some GVN troll is reading this post - pay a bonus (of any hue) to a Lloyds or RBS board member, and you can kiss my vote goodbye. Period!

  • Comment number 38.

    The position that Eric Daniels and his little team are taking if they insist on their bonuses, which they no doubt will, could cause quite a massive headache for HMG.

    I hope that Gordon Brown will see that a real "sacrifice" is when you take pain in order to spare others suffering, and not some diminution of booty after your jolly buccaneers have sunk a treasure ship.




  • Comment number 39.

    Robert,

    Dont you mean that this is a decision for UKFI at arms length from Government - has the framework agreement for its operation been published yet?

    Glenn Moreno ( Chair) - Pearson / Fidelity
    John Kingman ( CEO) - HMG/FT/EIB
    Peter Gibbs-Merrill Lynch
    Michael Kirkwood- Citigroup BBA Chartered Bankers
    Lucinda Riches-UBS equity banker
    Tim Sykes- analyst UBS/Credit Suisse/Standard Chartered
    John Crompton - Merrill Lynch / Morgan Stanley

    Any non-banker / financial world connected people in there? Too much to ask?

  • Comment number 40.

    Lloyds were strong armed into buying HBOS. The reason that there was no competition to the acquisition was that HSBC were being kept in reserve to takeover RBS.

    I feel sorry for Lloyds shareholders, forced into taking that pile of rubbish over. Yet not that long ago Lloyds directors were being pilloried for being risk averse and not pilling into what became toxic investments

  • Comment number 41.

    Sure, Give them their shares as options with a striking pricee that will reward them when/if the shares recover, say, 80% of their peak value. Their bonus will then be well-earned. And if the shares don't recover....

    Fair shares
    ed

  • Comment number 42.

    Shareholders have a vote, the government should vote according to public wishes, which have been made abundantly clear here and elsewhere.

    Anything else would be a betrayal of the public trust that would call into question the legitimacy of the government's claim to represent the people.

    Brown and Darling should be reminded that their decision in this matter will be remembered come polling day.

  • Comment number 43.

    The Board should be immediately dismissed for even considering paying themselves bonuses.

    THIS HAS GOT TO STOP!

    As a private shareholder (in addition to my taxpayer stake) whose Lloyds shares have crashed I shall be at the AGM making a lot of noise if this is on the Agenda.

    Our government can expect riots in the streets unless they intervene and stop these greedy practices - we've all had enough.

    A bloody disgrace.

  • Comment number 44.

    The taxpayers have contributed generously to the rescue of most of our major banks thanks to the Government's intervention. The jobs of staff and directors have been saved and this is their bonus. It is quite unreasonable to offer them further pay beyond their fair remuneration which can only be at the taxpayers' expense until the banks are once again running profitably. Only then would it be fair to offer additional remuneration for a job achieved.

  • Comment number 45.

    We need some joined up thinking at the BBC.

    Synchronise blog posting times with having enough moderators to deal with responses in a decent time period!

  • Comment number 46.

    Should LLoyds pay a bonus - NO!!!!!!!!!!

    See about 400 out of 424 blogs on exactly the same subject re RBS including mine at #103.

    If this is a forum for public opinion then my opinion is that bonusus paid to bankers at whatever level and particularly those at the top is an incitement to riot and if I was a banker who might get a bonus I would decline it publicly to avoid the risk of being lynched by an angry public.

    NO BONUSES
    NO BONUSES
    NO BONUSES
    NO BONUSES

    Get the message?? NO?

    Well here it is again.

    NO BONUSES
    NO BONUSES
    NO BONUSES
    NO BONUSES

  • Comment number 47.

    It seems both the UK and US governments are running a horse and cart right through employment law.

    If you put in an employee's contract targets and bonuses for meeting those targets, surely you are legally bound to pay those bonuses, regardless of company performance, change in circumstances etc.

    What Gordon and Barack are encouraging is pocketing of these monies by the company. End result will be that the employee won't believe future promises and will either go where he/she can be guaranteed a bonus and trust the guarantee, or they will work as if there was no incentive - as in government departments.

    End result - REAL banks will attract the best people and these people will do a better job and nationalised banks will do less well - just like history tells us all nationalised industries do. Ho Hum!



  • Comment number 48.

    I believe that the question is best settled by the board under present circumstances. Should the government wish to get into the day-to-day running and operations of a bank, then they should formally take control. However, I don't believe they would wish to do so, because this would quite rightly be seen as being a serious mistake. It would leave the business of running a bank open to the influence of the government, which in turn is influenced by the hoi polloi and 'special interest' groups. This would inevitably lead to further interventions in business decisions which would lead to ever greater market distortions. We are still dealing with the aftermath of Greenspan's interventions to lower the equilibrium rate of interest and to encourage the growth of new financial instruments. What is most desperately needed now is a removal of government interference from the market, not more of it.

  • Comment number 49.

    Let's hope Gordon Brown realises the weight of feeling on this matter.

    This is the time to ban obscene bonuses for good, we should never again get into this mess by people who's only objective is their own vast greed

  • Comment number 50.

    If Lloyds TSB announce a profit I see no reason why the Executive members should not receive a bonus in shares this year providing the HBOS executive doesn't receive a bonus if HBOS announce a loss.

    Now will the two newly government appointed directors receive bonuses next year if the newly formed Lloyds Banking Group group turns the ailing HBOS around?

  • Comment number 51.

    COME ON??

    THE ANSWER IS NO!

  • Comment number 52.

    In any event the take over of HBOS will

    no doubt take down Lloyds TSB.


    I just wish i had PETITIONED HALIFAX PLC

    WHEN I HAD THE CHANCE IN 2007.

  • Comment number 53.

    I repeat my previous comment

    Gordon Brown must call a halt to all banking bonuses

    at least until the present crisis ends

    not to take firm action now will be seen as

    being scared and hypocritical

    having a vested interest in his own future job in the city

    being totally unfair to the rest of the population, all of whom are suffering and WHO HAVE VOTING RIGHTS


  • Comment number 54.

    It's official, Joe Muggins,aka the taxpayer, is the national milch cow. The bankers will get their bonuses, Lord Mandlesson may make weak mutterings but it's nothing to worry about. Democracy is now reduced to legally dipping into Joe's back pocket. Let's fund a stupid, costly war, no problem!Let's bail out the banks and let the bankers take their cut, no problem! These things are apparently unconnected but democracy only works if the people trust it. Do people in shiny offices have any idea how cross an awful lot of people are?

  • Comment number 55.

    No

    This sounds even better than cash!!!!!

    The banks shares are at rock bottom and there is no chance it will fail with the Gov behind it.....

    At some point in the future the shares may very well be worth 3 or 4 or more times there value today..... but I doubt very much less!

  • Comment number 56.

    It must be glorious to be paid to be incompetent!

  • Comment number 57.

    They certainly shouldn't . I have some £60,000 in a savings account with another major bank and am now recieving virtually zero income from it, this is causing me some problems to say the least.Thanks to Messers Brown and Company. Every day he stays in charge means more and more problems why can't he just go quietly .

  • Comment number 58.

    Bonus??? What bonus? The financial performance for 2008 should include HBOS -
    it was their decision to buy them.
    "They hope to make good profit out of HBOS in years to come". We shall see!

  • Comment number 59.

    Listen it will be news when the Banks dont pay bonuses. It makes it all easier when you understand that these are liars, cheats and fraudsters so of course they are going to take a bonus. Why the suprise ??? No banker has been investigated or arrested over the fraud that has taken place and they wont be.They have gotten away with it and intend to make merry.
    And as for the government they are only good at posturing and blustering until someone tests their resolve and then they fold. It has happened on every "initiative" they have ever instigated. Make a noise and hope that when push comes to shove the public will have forgotten .Basically they are usekess and should all resign and get back to being pretend politicians somewhere else.
    Is Paddy Power taking bets on whether the banks pay bonuses...get your money on.

  • Comment number 60.

    If they pay themselves bonuses, then they are asking for trouble.

  • Comment number 61.

    We just dont get it do we !! this is going to cause public outrage. Any bank that has needed taxpayers money to continue in business should not give out bonuses until they have paid all the taxpayers money back. The execuse to use bonuses to retain the best staff cant be used as I don't think anyone would be that silly to change their job in this economic environment because of a lack of their bonus. Are the banks aware that their refusal to lend is hampering business and people are losing their jobs left right and centre. Gordon Brown have some backbone and say no to any bank bonuses until this mess is well and truly over.

  • Comment number 62.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 63.

    Its a no brainer. The bank has made massive losses.the banks shareholders and depositers have taken a huge hit.They are very lucky they still have jobs.The bonus culture has to go. IT has destroyed million,s of pensions paid in the form of interest to retired people. There must never again be a bonus culture,evan if the bank makes a profit in the years to come.

  • Comment number 64.

    pay it in shares with a lockin of 3 years...that should be fine...

  • Comment number 65.

    RP: Should Lloyds pay a bonus?



    No!

    They would be bust without our money.

    Buster Brown must stop it.

    If any bonus is paid then there must be no more taxpayers money paid to them.

    It is a dull question.

  • Comment number 66.

    Lloyd's should pay a bonus, but it should be taxed at 99%

  • Comment number 67.

    I didn't used to like Clarkson, but apart from the apology, he is right up there now!

  • Comment number 68.

    Under Crash we have endured years of " stealth taxes"
    What's the betting on "stealth bonuses"?

  • Comment number 69.

    Paying these bonuses is typical of the immediate rewards in return for long term risks taken approach, endemic within the global banking industries.

    If I went into a bookies and placed a bet on a ‘dead cert’ for a race that is to be run in a couple of months do you think I could collect my winnings immediately?

  • Comment number 70.

    Come on moderators or are you all stuck in the snow?

  • Comment number 71.

    These bankers have created our present problems through reckless lending and idiotic investments. What was Eric Daniels thinking getting involved in the basket case HBOS when he had mostly avoided getting sucked in before? As a shareholder I would remind him he works for me and NO, no-one gets a Bonus until we get our money back.
    There are plenty of Bankers around. If they don't want the job many of us could do a better job at half the price. A Bonus is for success not for losing as much money as possible. Hornby on £60,000 a month for cocking up HBOS? Sack him or it is time for another Civil War.

  • Comment number 72.

    Lloyds should take their published figures. Subtract the money it has taken from the government and the value of an audited valuation of its exposure to toxic debt. Only after that should a determination of anyone's right to a bonus should be made.

  • Comment number 73.

    We need to escape this bonus culture, let bonuses be in the form of a profit share.

    I suspect shareholders attitudes will harden when they see millions being taken out of their slice of the cake.

  • Comment number 74.

    Any director that is in a senior operational position in any bank in the world clearly would be acting irresponsibly if that director accepted a bonus in respect of 2008. The Banks are in the position that they are in,we the public are told, because the banks do not trust each other and will not therefore lend to each other. However, logically it is not the banks that cannot be trusted it is the executives that run the banks that cannot be trusted as they do not trust each other. Self condemnation!
    If therefore those executives collectively have no trust in each other they cannot have earned any bonuses as Banks are about trust. If a bank cannot be trusted there is a run on the bank and then when it cannot pay its depositors it is out of business as insolvent.

  • Comment number 75.

    Brown leglislate to make any bonus 99% taxable or hold a referndum and they would get nothing.

  • Comment number 76.

    As a shareholder of Lloyds who has taken a severe hit over the past 12 months or so I would be disgusted if the board received any form of bonus for that period. Accountability and responsibility now has to be demonstrated by these people - they won't apologise for their ineptitude and poor decision making but their refusal of a bonus would be a good start in the process of renewal of shareholder respect.

  • Comment number 77.

    kiki_dread.

    Your post #1 has just appeared.
    I was wondering if there had been a new bout of broadband snowfall.

    Like your posts and look for them too.

    Perhaps some of the fear has sublimed from the Economy but the thaw will still leave very many out in the cold.

    I'm obviously not typing from Cardboard City; London, NY, Tokyo, Beijing, Moscow,...etc.
    I cannot even name those Capitals of the 'Group of Twenty' off the top let alone those Countries but it seems the World is awaiting something positive from their get-together.

    Hail to Bob [M not P].

    N.

  • Comment number 78.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 79.

    Wot no moderators.

    Posts at t 4.15 still awaiting moderation.

    Its a disgrace.

  • Comment number 80.

    Why is this even an issue for discussion at present?
    No bonuses,got it? And no more talk of bonuses for two years, then a review.
    Got that?
    Let's see if this punch-drunk government can show some leadership mettle, and move on.
    John C.

  • Comment number 81.

    Before any bonus is considered what about a visit from HM Revenue & Customs?

  • Comment number 82.

    Surely the banks will not be awarding bonuses this year to higher management simply because they cannot possibly have hit the targets required.

    What possible wording can there be in a banking target to justify a bonus?

    Your target this year is to reduce the share price by 90%

    You will need to induce a run on the bank to ensure you reach OTE

    Exceptional rewards will be given for exceptional achievements such as bankrupting a country


    Within any bank there is a pyramid of objectives where small goals add up to large goals achieved.

    Clearly the large goals have not been achieved, in fact the reverse, so no bonuses for high up managers.

    The small goals can be rewarded.

    eg Area manager signed up 100 new company accounts in the year.

    eg Teller had yearly discrepancy of less than £100.

    Generally these will be small awards and unlikely to invoke public protest. Thus I think it would be unfair to introduce a blanket ban on bonuses, but it should be a matter for shareholders if any higher management get bonuses.


  • Comment number 83.

    From the Independent (1st Feb)

    "A group of Cambridge entrepreneurs and businessmen are so outraged by the behaviour of the banks that they are setting up their own.

    Telecoms guru Dr David Cleevely said: "We are sick to death of the way the banks are operating. They are offering people almost nothing for deposits but charging small businesses up to 15 per cent for their credit facilities. There is something fundamentally wrong." Dr Cleevely, the founder of Cambridge Wireless and Abcam, the world's biggest catalogue for antibodies, is working with a number of businessmen on plans for a bank serving depositors and commerce.

    "Quite apart from the social issues, there is an arbitrage opportunity here to set up a bank because of the huge disparity between borrowing and lending," Dr Cleevely said. "Talk of their being no money around is nonsense. There is tons of money but no one wants to put it in the banks earning next to nothing."

    Other businessmen involved include Nigel Brown of NW Brown, the Cambridge-based corporate financial house, and Dr Alan Goodman, a biotech entrepreneur who has founded more than 30 companies. Early talks have been held with Cambridge University and Cambridge City Council.

    Dr Cleevely said they are looking at a vehicle known as the Industrial Provident Society, which is regulated by the Financial Services Authority, to use as the mechanism for the bank. This needs a minimum threshold of €2m (£1.8m)capital and allows its members to lend and take deposits: "I see a renaissance of the mutual societies and co-operatives which we saw in the 19th century." The entrepreneur added that fury is growing around the country over the behaviour of the banks and how they have failed their customers. "There is no doubt in my mind that the way the bankers were rewarded has led to their reckless lending. "Big fat salaries distorted the risk and led them to take risks they shouldn't. We need to change this and it could be that commercial and investment banking must be separated by law."

    The Cambridge group has been in contact with the Treasury over the project. They have also expressed their dismay that the Small Loan Guarantee Scheme is not working properly."

    I'd move my money in an instance if my Bank pays Bonuses.

  • Comment number 84.

    Can we please make a distinction between the Executive of banks and the 'average' bank employee. The vast majority of staff in banks work very hard to deliver a good service to their customers and are paid an average salary.
    These staff had nothing to do with the massive losses made in other areas of their organisations.
    Over the years, many of these people have taken their profit sharing in shares, or saved to buy shares, through SAYE. I know people on £12-15k per year that have lost tens of thousands of pounds.
    Lets also be clear that the UK tax payer has not 'given' the banks anything - they have made an investment, which could deliver a significant profit in years to come.
    The banks and their employees have paid billions of pounds in taxes in recent years - RBS, and it's staff, has paid over £15 Billion to the treasury, over the last 10 years.
    By all means, have a go at the senior people, that made ill timed and ill thought out decisions, but please don't tar all banking staff with the same brush

  • Comment number 85.

    Unless I'm mistaken Lloyds have said they intend to repay the Govt money this year. Presumably they could do that when announcing their 2008 results on 27th Feb and then they would be free to act as they choose.

    Incidentally I hope they will on that day announce their lending amounts for each of the months in 2008 compared to 2007 thus demostrating that the major reduction in lending comes NOT from many of the UK banks but the absence of lending from O'seas banks that operate in the UK. That in itself would to my mind be very full justification for paying bonuses to those responsible

  • Comment number 86.

    Now maybe Lloyd's has been run as a paragon of management competence, and they will be able to turn around the HBOS dead dog................ but maybe not.

    What they have to realise is the critical searchlight is very much shining on the banking industry, and they will be tarred with the same brush as every miscreant.

    All banks make filthy and unreasonable profits from their customers, Lloyd's are only less grubby because they managed -as far as we know- to keep clear of the sub-prime debacle.

    It would be perhaps politic for them to lie very low for a while and not mention bonuses, incentives or profit share for their senior executives. I suspect none of them are on poor-man salaries.

    If they run their business well over the next few years they are going to make a fortune from the rump of HBoS and will surely be able to syphon off some filthy lucre for themselves during that time.

    So why be even more greedy at this time ........

    I don't reckon any of them deserve a bonus for just being sensible and conservative, but bankers can't help themselves I suppose. So shame on them, they just don't get the message.

  • Comment number 87.

    Say No to Greedy Bankers' Bonuses @

    http://www.facebook.com/group.php?gid=49114669212

    Social networking CAN make a difference
    Please join the group and have your say

  • Comment number 88.

    What about the FSA? They have been responsible for the regulatory failures which have caused this crisis, yet the FSA pays bonuses to its workers, just like the banks.

    The banking crisis was a failure of regulation. Get rid of the FSA, I say. They receive funding from the very organisations they are supposed to regulate and that has to be a nonsense.

  • Comment number 89.

    not only do lloyds directors not deserve a bonus they should be all fired for gross incompetence.........there was no commercial reason to takeover hbos, they just let the government strong arm them into it! They should have resisted, it was a good bank before this deal brought it to its knees! they are supposed to act in the best interest of the shareholders not to bail out incompetent governments.

  • Comment number 90.

    Unbelievable. Is it the banks fault for the no boom and bust picture painted by the prime minister. Perhaps given his failure he would like to forgoe his perks and privileges. Now I am not saying the banks have shone in glory however it is so easy to blame them for all the troubles. Recession is like nature it is part of a cycle. Who knows what has been said behind closed doors between the government and Lloyds over HBoS - remember Lloyds was and is a traditional bank on good lending values but was critiscised for poor performance when many banks were making bumper profits from activities which have now been called toxic. Equally the media needs to have some responsibility. Tell the public enough times a particular story and they will believe it! Where is the balance there is good news out there search and you will find and until such time as this balance begins we will continue to circle downwards on the spiral of negaive journalism and hence no confidence in the markets. I hope Peston is a proud man for his part in alot of this negativity!

  • Comment number 91.

    N N OOO
    NN N O O
    N N N O O
    N N N O O
    N NN O O
    N N OOO



    the government seriously risks protests on the streets if they award any bonuses to staff at any bank that has had money given to it by the taxpayer.

    it cannot be justified.

  • Comment number 92.

    Robert

    Re : earlier post, UKFI will settle the bonus issue as follows :-

    "UKFI will work to ensure management incentivisation based on long-term value maximisation, which attracts and retains high quality management and which minimises the potential for rewarding failure"

    ..............minimises the potential for rewarding failure????

    Takes a banker to know one.

  • Comment number 93.

    Robert:
    Simply put - without taxpayer funding those Banking Organisations were insolvent/ are insolvent/ are likely to remain insolvent for the forseeable future...

    Notwithstanding the Billions of direct Capital injected into the Banks, they have had need of a further £200 Billion to meet day to day liquidity 'issues', and a further £200Billion to be available as standby...

    And still we have not heard the simpering truth!!!

    The taxpayer is now in this for 'life', literally in many cases... so perhaps some of the whining Bankers should be considering whether they deserve 'life' for their part in the country's obsequious demise - rather than adopting their self-serving snivelling to cloak their snuffling in the 'Peoples' trough...

    "Wake up - smell the coffee", as 'they' say all too readily to errant personal and business customers when they approach their local neutered Bank Manager ...

    In any other walk of life it would be expected that the business would 'fold' and there would be utterly no question of 'bonus'.

    Imagine also, if you will, the Good Bankers' response to your pleaded request on bended knee, for 'an extension to your overdraft'... The explanation being that your employer is insolvent/ bankrupt/ has just written of £250Billion (with the expectation that this is not the half of it). You do of course reasonably expect that the liquidator will pay your 'bonus'... and so the Bank is at no 'risk'... Eyes would not expect to meet as you were invited to 'Close the door on your way out, Mr Err, Err, Err, Lubbock did you say?'

    Personally, I am not minded to exempt the mindless and feckless few who led the country to this unholy situation - just because they have been 'bialed out'.

    Unimaginably, there remains a stout bulkwark of Senior Managers who will simply not accept their own complicity. To-day brings word that Senior Risk Professionals consider that they have had their 'Best Year Yet' and expect to be rewarded accordingly - albeit there is a grudging acknowledgement that there will not be much left for the 'numpties'!!!

    So palpably arrogant and demonstrably 'unfit for purpose' are these individuals that it is difficult to see where their futures might lie... other than the 'Dole'

    "Bonuses for a 'failed' and 'discredited' industry..." - at the taxpayers expense!!!

    Quite, quite unacceptable, and must not be permitted... Under any circumstances!!!

    It's time to line up the tanks...

    There is another way...

  • Comment number 94.

    The inference that if you don't pay fat cats fat cheques as a 'bonus' (I call that theft of MY and YOUR money, folks!) then you will lose able brains in banking. Rubbish! Be happy if they resign. If a small miracle occurs and banking becomes once again - was it once? - an honest profession, then people of brains AND integrity might take it up, that is if we are lucky.

    You only have to look as far as your local council merrily deciding on ridiculous salaries for non-jobs and vast expenses, grinning over their oh so secure pensions (which I, as a low income pensioner of 4 score years, make a tiny contribution to) and you might come to the conclusion that actually, it doesn't take brains and ability to syphon off money from the populace, only a certain type of low, self-seeking cunning.

    Now I come to look at it more closely, the answer could lie in emptying the prisons of all those convicted of fraud, and put them in charge of the banks, with any left-overs in charge of the local councils. This way, they would know they are under constant scrutiny and perform to a high standard of honesty! How simple! The problem is - are there enough in prison to supply all the banks?!! If not, convict the present thieves and self-seekers running the banks of fraud and then let them back in - with criminal records, of course!

    There you go!

    Just wait while I calculate if I can afford to live another few years.

  • Comment number 95.

    The question of these bonuses is a distraction. The US welfare net is failing because it's being overloaded with claimants, if it fails because of blind faith in technology - always an American failing - then their society will be on the verge of meltdown, as the urban poor, without hope, will simply take what they can. And when America melts down...

  • Comment number 96.

    Real simple.
    If the bankers think they are worth a bonus let them explain why.
    If they have come up with a real good hum-dinger of an idea that brings in millions for their (our) bank then so be it.

    However in order for them to make millions you have to consider where the bank actually gets the wealth which translates into money and bonuses.

    That is right. The banks get the wealth, money, from us.

    So. The banks make loads of money.
    From us.
    Then the bankers take that money from the banks as a bonus.
    Job done.
    We know our place.

    Of course that model only works if the banks are actually profitable.

    Otherwise the bankers have to get us to bail them out and recapitalize them, and more, so that they can pay themselves bonuses.
    Job done.
    We know our place.

    The real moral hazard here is that the general public will start to understand how banking works.
    Where money comes from.
    What money is.
    Then the bankers WILL be in trouble.
    But then of course so will we all.

    Much better that we just know our place.
    Give the bankers as much as they want.
    Whose money is it anyway?
    What is money?

  • Comment number 97.

    Given that 99% of all the well educated posters on here are adamant that bankers do not deserve bonuses then it's a pretty safe bet that it's a bad idea.

    In fact it's blindingly obvious to anyone.

    Yet when you hear government ministers or people from the finance world talking, you get the idea that it's a difficult balance etc.

    I have yet to see/hear anyone on the BBC absolutely slamming bonuses or suggesting they should be repaid. Why is this? It seems like we are allowed to vent our opinions on here where nobody sees them, and that's it.

    The country is falling apart around our ears and yet all we get is a load of rubbish about fiscal stimuli, global measures etc, none of which will do the slightest bit of good in the long term.

    On Question Time last night the questions mainly covered subjects such as the snow and Carol Thatcher. There was a bit about the foreign workers which didn't really go anywhere.

    Why was there nothing about either the economy at large or the disgraceful way that our rule of law is being trampled on by the USA?

  • Comment number 98.


    The fact that these banks are even considering bonus payments for management positions just completely proves that they are living and always have lived in an alternate universe.

    Over the last year we have all sat jaw dropped, aghast at what these guys have been up to. Now we know for sure that they really are totally disconnected from the real world. And to think of the taxes I and my children will be paying to have saved them is enough to make your blood boil!

  • Comment number 99.

    Yes they should be allowed to take a bonus in shares.

    1) They make a profit, they deserve to be rewarded. The HBOS deal was a rescue bid enforced by the Govt, let them be rewarded for their diligence in the previous year.

    2) Giving a bonus in shares gives them a real incentive to ensure the company performs well, ensuring they give back the tax payers money with 12% interest quickly, and making our Banking sector stronger again.

    3) Once they have their bonus, make them share it out with the cashiers in the branches who work very hard for their £12500 a year for their 35 hours over 6 days.

  • Comment number 100.

    3. At 4:04pm on 06 Feb 2009, 25_and_no_hope wrote:
    FAO: HunkieDunkie

    Re our little RBS Share Price wager from a couple of weeks back - just drop 3 of your finest pounds into the next charity tin you pass by and we'll call it quits...


    As for the bonuses, their share price pre-merger fell just like every other bank, affecting thousands of pension pots just like every other bank.

    No bonuses in the banking sector are justified during this period of uncertainty, but the government do not have the strength to stand up to the banks and tell them this.



    I can only smile and shake my head... Will do, and in good RBS style, I'll double it and tell the local press just how 'Community Focused' I am...

    Cheers


    I do agree with your sentiments (see previous posts) Banks and their Management (Senior, Middle & Junior) in my experience are inept, and failing to understand all but rudimentary concepts of Corporate Enterprise...

    Bonuses are awarded for 'fortuitous' deposits these days! Absolutely incredible!!!

    I have no doubt that HMG lack the 'bottle' to intervene regarding bonuses... (But I have lost money to your name before, so nothing 'on offer' this time...)

 

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