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Bonus war: Barclays £2bn vs RBS £1.3bn

Robert Peston | 12:05 UK time, Saturday, 13 February 2010

It's not often that Barclays does a favour to Royal Bank of Scotland.

But in deciding to pay something over £2bn in bonuses to its investment bankers, it will provide helpful "context" for Royal Bank of Scotland to award around £1.3bn to executives in its global banking and markets division.

On Tuesday we'll learn that Barclays is paying out around £4.5bn in total remuneration to the 22,000 investment bankers employed at its investment bank, Barclays Capital.

So average pay for Barclays Capital's 22,000 people will emerge at around £205,000 - or marginally more than the annual pay of the prime minister, and about a third less than average pay for a Goldman banker.

And something under half of this will be in the form of bonuses (though Barclays may not put the precise size of the bonus pool into print).

Meanwhile semi-nationalised Royal Bank of Scotland has more-or-less agreed with UK Financial Investments - steward of taxpayers' controlling 84 per cent stake in the bank - that it will pay out £1.3bn in bonuses to its bankers.

For the avoidance of doubt, there has not yet been a formal sign-off of RBS's bonus awards by the Treasury and 10 Downing Street.

But my sense is that the Chancellor will ultimately approve them.

So if you're a banker, you'd probably say "well done, Barclays" and "hard cheese, RBS".

Anyone else might well say "crikey" or something unprintable - because these are substantial rewards being doled out only a year and a bit since the banking industry was rescued with enormous loans, guarantees and investment provided by taxpayers.

Both Barclays and RBS will say that they are responding to the public's mood of unease about huge payments being made to their staff - and are showing "restraint".

Thus the ratio of investment banking remuneration to Barcap's revenue has been deliberately reduced by management from 44 per cent in 2008 to 38 per cent last year.

And at RBS, that ratio will be nudged even nearer to 30 per cent.

The benchmark is the world's most successful investment bank, Goldman Sachs, which paid out 35.8 per cent of its net revenues in the form of compensation and benefits for its stellar performance in 2009.

However the relevant background for assessing the supposed sacrifice bankers have made in cutting the ratio of rewards to revenues is that the past 12 months have seen a return to boom conditions.

At Barclays Capital, for example, total income rose almost 80 per cent in the first half of 2009.

So actual pay in absolute terms for most investment bankers will rise for their 2009 performance compared with 2008, even if they pocket a lower proportion of the income they generated.

For many it will be one of the best years ever for pay, beaten only by the last year of the bubble, 2007.

What's more, many would say this boom in revenues was a direct result of the emergency measures taken by governments and central banks to rescue the global economy from a mess caused in large part by the bankers themselves (as one instance, when interest rates are cut by central banks to almost zero, companies pay big fees to investment banks to refinance themselves at these lower rates).

Here are a few other relevant points:

1) Barclays will announce an enormous profit for 2009 while RBS discloses another whopping loss - so most would say that bumper bonuses look more incongruous at lossmaking RBS (although its losses would have been even more spectacular without the huge income of its global banking and markets division);

2) At both Barclays and RBS, top people will be paid in shares rather than cash, which does less damage to the banks' balance sheets and - in theory (if not always in practice) - discourages executives from taking crazy risks to generate immediate profits.

3) At both banks, receipt of most of the bonuses for most executives will be in a series of tranches over three years - with the ten most senior executives at Barclays receiving nothing for their 2009 performance till 2011.

All that said, the experience for employees in much of the private sector in 2009 was flat or declining basic pay coupled with lower or zero bonuses. So Barclays and RBS probably can't expect most British citizens to celebrate the improved fortunes of their senior staff.

UPDATE 14:31 Barclays tells me that Barclays Capital in fact employs 23,000, so pay per head is in fact £196,000 - or a tiny bit less than what the prime minister earns.

So that's alright, then.

Comments

Page 1 of 2

  • Comment number 1.

    Zero % interest rates.
    A stockmarket rising again AFTER A BANK-CREATED COLLAPSE.
    The public shoring up the losses of many banks, and thus guaranteeing the survival of all the others.
    Chimpanzees could make money in these conditions, couldn't they?
    And let's hope these profits are real this time.... many banks have had a strange concept of what "profits" are, in the past.

  • Comment number 2.

    IB is fantastic business model, if you work in IB - closed shop due the banking license,central banks making liquidity available at near zero cost, all risk ultimately government guaranteed (you and all counter parties)and you get to keep whatever income you make, regardless of the level of the risk necessary to generate that income (The taxpayer will deal with this).

    Am sure the debate about RBS's corporate performance and their bonus pool will rage hard this week but ultimately where any industry views £202,000 per head as 'restraint' then you've got to ask if the business model employed is allowing the large financial institutions to operate like a risk-insured cartel & simply tax capital movements running through the global economy

  • Comment number 3.

    22000 'exceptionally talented' bankers? Was that a misprint or a joke? That could mean a football league with about 40 divisons. A final for X factor running for 10 years. More Michelin 3 starred restuarants then there are McDonalds. I'm so angry I can't think of any more.

    Perhaps these 'talented' people should stand for parliament if they are worth so much - we need people of such tremendous quality. Or are they more guilty than MPs of stealing our money? Make no mistake when they talk of 'institutions' they mean our pension funds and our life insurances. They may be making them more valuable, but they are also taking an enormous cut from us.

  • Comment number 4.

    One should be much more concerned at the obscene bonuses being drawn by directors and staff of the bbc.
    This organisation is funded by a license tax and owned 100% by the viewing public, who demand that this situation is corrected.
    The bbc concentrate on the banks and report nothing of the equally horrendous happenings in their own house.

  • Comment number 5.

    People should make a distinction:

    - a bank that failed the FSA stress testing exercise (RBS) and needed to be bailed out due to a business model where risk management was disconnected with decision making people. Incidentally, this bank is now 84% owned by the same entity that is providing a guarantee for it (the Treasury). Can anyone see that this is a joke?

    - a bank that passed the FSA stress testing exercise (Barclays), was not nationalised as a result and remains a private institution in this country.

    Rob, worth you spending a bit more time with the lights on when you blog?

  • Comment number 6.

    Inflation is running at 3% and the Bank of England is holding interest rates at basically zero. It's impossible for a bank not to make money in such a situation, no matter how incompetent. The Bank of England is shoveling money into the banker's bonus pools as fast as possible -- straight out of responsible savers' bank accounts. Whether Barcleys is paying more or less in bonuses than RBS is irrelevant, because none of the banks revenue is actually earned in any sort of economic sense -- it's just a gift from the state, trying to re-inflate the credit bubble.

  • Comment number 7.

    I feel the deepest sympathy for those poor investment bankers at RBS who will have to put up with only a £1.3Bn bonus pot; goodness, how will they cope? I'm sure they'll have to downgrade to driving a Porsche instead of an Aston Martin, settle for 4 weeks in Barbados instead of Dubai, buy D&G instead of Gucci... It's a tragedy for them.

    It makes my teeth hurt to think that any of those thieving, troughing, contemptuous bankers deserves more than a collective kick up the backside and out of their jobs for bringing this country to its knees, let only a bumper reward for profits generated on the back of most of the populations hardship that they created. The cockney "Merchant Bankers" was never more appropriate.

    And no, this isn't jealousy. This is pure, unadulterated anger that my hard earned taxes are going directly in the pockets of a small group of individuals who frankly owe more to the state than any other group I can think of.

    The old joke about lawyers seems more appropriate when used against investment bankers...

    Q: What's 10,000 investment bankers at the bottom of the sea?

    A: A bloody good start.

  • Comment number 8.

    2. At 12:59pm on 13 Feb 2010, rm_doodle wrote:

    'IB is fantastic business model, if you work in IB - closed shop due the banking license,central banks making liquidity available at near zero cost, all risk ultimately government guaranteed (you and all counter parties)and you get to keep whatever income you make, regardless of the level of the risk necessary to generate that income (The taxpayer will deal with this).
    Ultimately where any industry views £202,000 per head as 'restraint' then you've got to ask if the business model employed is allowing the large financial institutions to operate like a risk-insured cartel & simply tax capital movements running through the global economy'


    I don't who you are rm doodle, but if I were voting for the post of the week, I'd give it you.

  • Comment number 9.

    Good article, but I cannot help see:


    THE REALLY GOOD NEWS BEHIND IT ALL!


    Bonuses mean
    the banks are at long last making good money again
    means good profits
    means share price rises
    means increased equity
    means a solider position
    means more mortgages and loans
    means a healthier property market
    means a stronger economy means
    more taxes get paid.....
    and selling off of bank shares by government
    and paying back of debts by banks
    means stronger public finances
    means more jobs and less cuts
    means a happier country
    means I do not mind if these guys get a bonus
    if it means we are getting back on track.

    Which
    means
    BONUSES ARE GO + UK IS OK!

    OK?

  • Comment number 10.

    I work in the IT industry, and my contract includes the possibility of a bonus of up to 20%. What actually gets paid depends on 2 things. The first is the profitability of the company. If we can't afford it, then no bonuses get paid at all. The second factor is personal performance. Bonuses are paid based on performance above and beyond expectation. I am paid to do a specific job. If I perform that perfectly, them my bonus is likely to be pretty minimal. I would have to seriously over-perform in order to achieve anything like my full bonus.

    I suspect that both these ideas would be alien to investment bankers. They are paid to make money for their firms. If they do that, then they are merely doing their jobs, and their bonus rates should be pretty small. If they make exceptional profits compared to their peers, then a maximum 20% of salary seems fair enough. First call on the profits of the company goes to the shareholders. If the staff want to increase their share of the profits, they should ask for their bonuses to be paid in shares so that they benefit from increased dividends in future years.

    Cash bonuses that dwarf the basic salary makes no sense. The only payment regime in which it can be justified is if the salary is minimal and they are remunerated on a commission basis.

  • Comment number 11.

    #9. onward-ho wrote:

    "BONUSES ARE GO + UK IS OK!"

    Please look at the wider view. Ridiculous pay levels will antagonise and indeed have already antagonised the general public.

    Banks don't make money - they acquire money from others and require a regulated monopoly position to do so. They wasted and lost huge, almost unimaginable, sums of money in bubble economies speculation of the noughties. They knew the bubbles would not last and they didn't. Now, they have so suborned the state as to get preferential treatment as against the rest of the population. Are they please not to have gone bust? - apparently not.

    They still believe that the are immune from normal economic forces and can infinitely steal money from the poor. This is not so. They are being incredibly stupid in making these huge monopoly profits. History has shown time and again that when monopolies believe that they are invincible that is rapidly followed by their collapse.

    I am very worried indeed for the stability of the global financial system, the more so given the huge (fake) bonuses that they are awarding themselves. And in consequence bonuses at this time are a sure sign of imminent collapse.

  • Comment number 12.

    so most would say that bumper bonuses look more incongruous at lossmaking RBS (although its losses would have been even more spectacular without the huge income of its global banking and markets division)

    Hmmm interesting spin on things particularly as the interesting accounting changes over the last year which make it look as though the rest of the bank are huge loss makers while global banking are making huge profits

  • Comment number 13.

    It’s too easy to get plastered with whatever you work. You are unfortunate it's manure and fortunate if it's money. I agree with almost all the criticism of banking and finance (B&F), but we cannot do a lot about it.

    What we might be able to do something about is making sure B&F do their jobs properly and, if not, provide an alternative.

    I’ll give an example of what makes me absolutely sick about this kind of thing, real but suitably sanitised. An engineer invents some gadget; say a medical one of immense value for saving life. To get the thing into production, he has to mortgage his house, work 18 hours per day, do most of the production work himself, do the sales himself, and expect his wife and family to survive on less than social benefit. Why? Because it’s so difficult to find a financial partner to get something into production in the UK.

    My point: if the B&F sector cannot provide sufficient help to people like my example, then the government needs to create something that will.

  • Comment number 14.

    A joke I read recently
    ---------------------------------
    It's a slow day in a little northern town. The single mothers are packed tight into the coffee bars.

    There's a chill in the air, and the streets are deserted. Times are tough, everybody is in debt, and everybody lives on credit..............

    On this particular day a banker is driving through town. He stops at a local hotel and lays a £50 note on the desk saying he wants to inspect the rooms upstairs in order to pick one to spend the night.

    As soon as the man walks upstairs, the hotel owner grabs the £50 and runs
    next door to pay his debt to the butcher.

    The butcher takes the £50 and runs down the street to settle his debt to the farmer.

    The farmer takes the £50 and heads off to pay his bill at the supplier of his animal feed.

    The guy at the Farmer's Co-op takes the £50 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her "services" on credit.

    The prostitute rushes to the hotel and pays off her room bill with the
    hotel owner.

    The hotel proprietor then places the £50 note back on the counter so the
    banker will not suspect anything.

    At that moment the banker comes down the stairs, picks up the £50 and states that the rooms are not satisfactory, pockets the £50 and leaves town.

    No one produced anything. No one earned anything.

    However, everyone concerned is now out of debt and now looks to the future with great optimism.
    ---------------------------------

    Only works in a cash economy, otherwise the banker would have taken a few percent for each transaction......

  • Comment number 15.

    #13. WolfiePeters wrote:

    "if the B&F sector cannot provide sufficient help to people like my example, then the government needs to create something that will."

    I have seen many of the attempts of the government(civil service) to pick winners and it is almost universally a disaster.

    I would add that nub of the problem in the UK is the totally uneconomic price of land and buildings for small businesses. The move from a free rent garage to small business/office is such a huge economic step that most businesses can't make the jump. On the other hand if free start up building were made available those up the rug would rightly complain of unfair competition.

    However (another factor) on a global basis rents are far too high. What this means is that the currency is hugely overvalued. But of course the bankers will hate it if you confiscated their wealth by either taking steps to drastically reduce property prices and/or the relative value of the currency. But as the state has been suborned by the banks for decades I really would not recommend that anyone runs or sets up a business in the UK.

    Anyone with a determination to run or create a business is best advised to leave the country until we have castrated the bankers!

  • Comment number 16.

    11 John from Hendon .......

    Get real John....IF YOU ARE DEALING WITH MILLIONS OR BILLIONS AND YOU EARN YOUR BOSSES GAZILLIONS YOU DESERVE A HEFTY BONUS.

    THESE GUYS ARE BANKERS...... THEY ARE ONLY IN IT FOR THE MONEY.

    DO YOU WANT A BUNCH OF SOCIAL WORKERS TRADING DERIVATIVES?

    IF YOU PAY PEANUTS YOU GET MONKEYS.

    A PROFITABLE BANKER IS WORTH HIS WEIGHT IN GOLD!

  • Comment number 17.

    However the relevant background for assessing the supposed sacrifice bankers have made in cutting the ratio of rewards to revenues is that the past 12 months have seen a return to boom conditions.

    But also the part of the relevant background is:
    The many people have been getting £64 a week or less doled out to them as a result of bank activities?
    Just how many bankers (and I don't mean the tellers/back office admin staff on low wages) got their P45 and the £64 a week, been left on short time or have found minimum wage jobs to replace the better paid ones that are now all gone?
    How many kids will not get into University this year - so no means of escaping the dole while the academic staff await their redundancy notices?
    There's an endless list of victims.
    Good job guys! Absolutely breathtaking, and mummy may be proud.
    You've wrecked the global financial system, left the mess to the public to clear up, and made the Train Robbery look like an amateurish theft of monopoly pennies. Off you go whistling with your grubby bonus cheques, as you busily add the finishing touches to your current bubble.
    Perhaps grubby is a touch too generous.....

  • Comment number 18.

    #16. onward-ho wrote:

    "EARN"!!!!

    No. No person legitimately 'earns' the figures that you mention. You are appearing to be devoid of a moral compass if you believe so.

  • Comment number 19.

    To add a little more 'context' how much do you get paid Robert Peston?

  • Comment number 20.

    #3 At 1:06pm on 13 Feb 2010, Boilerbill wrote:
    "22000 'exceptionally talented' bankers? Was that a misprint or a joke? That could mean a football league with about 40 divisons. A final for X factor running for 10 years. More Michelin 3 starred restuarants then there are McDonalds. I'm so angry I can't think of any more.

    Perhaps these 'talented' people should stand for parliament if they are worth so much - we need people of such tremendous quality. Or are they more guilty than MPs of stealing our money?"

    They don't stand for parliament precisely because they're successful. Parlamentarians know they'd fall flat if they left their comfy, prattling existences on the benches of Westminster. I mean, think of it: Darling, Brown, Mandelson, Osborne...successful investment bankers? Purleeeeeze!

  • Comment number 21.

    Why do you quote this ludicrous "average salary" figure? What does it mean? What is the point of it? It gives off the ignorant impression that most people earn this "average figure" whilst in reality most people in banks earn much much less. Do you do it to create envy in the general populace?

  • Comment number 22.

    16. onward-ho wrote:

    "A PROFITABLE BANKER IS WORTH HIS WEIGHT IN GOLD!"

    Say the average (male) investment banker is 12 stone = 2688 ounces.

    Gold is currently £696.54 per ounce = £1,872,299.52.

    Bob Diamond (Barclays) earned nearly 20 times that last year.

    Perhaps bits of him ought be traded on the bullion markets?

    An ear could be worth nearly £2k.

    Heaven knows what more substantial bits could fetch.

  • Comment number 23.

    So after a year when all the banks threw up their hands and said
    'woops we have no cash'
    the bottom line is there was cash after all, they are still making profits and low and behold a bonus as well!!!!!

    And now making money off us all even more and planning to pop off the Switzerland to recover and make more personal cash!

    Or have I got this wrong?
    As in the oil companies what will they do with all the money now? What will they spend it on? At the moment not the country or people in my experience.

  • Comment number 24.

    They call us sheep. Now I know why.

  • Comment number 25.

    Not trying to encourage the collapse of a Bank, but I decided a couple of weeks ago to vote with my feet and close all the accounts I had at RBS / Natwest, taking my business elsewhere ... Investment Bankers just 'don't get it'. Ordinary UK taxpayers will suffer for generations, funding economic recover from the consequences of the 'fast & loose' behaviour of Investment Bankers these past couple of years. Do we think the Investment Bankers are in pain given the bonus they are now receiving ? .... do they have any shame ? .... I think not.

  • Comment number 26.

    18 John the hairshirt
    PROFITABLE BANKING IS EXTREMELY MORAL ......
    EVERYONE'S SAVINGS ARE SAFE,
    PEOPLE CAN BUY HOMES,
    BUSINESSES CAN BE HELPED TO GROW AND EMPLOY PEOPLE,
    AND HALF OF THEIR BONUSES WILL GO IN TAX .
    BUT ONCE THEY HAVE IT , IT'S WHAT YOU DO WITH IT THAT COUNTS .....
    ASK THE FOUNDERS OF TSB, ASK BILL GATES, ASK WARREN BUFFETT.

  • Comment number 27.

    It's strange how no one called the banks when times were good and the government was raking in billions of tax revenue. How hypocritical we all are!

  • Comment number 28.

    I would only pay these people bonuses based on their real contribution to the economy.

    For example, how much funding have they provided for start-ups, spin-outs, early stage and growing companies. I'd also want to know whether they have had a positive impact on issues such as the products and services we produce in say the clean tech/alternative energy sector where the UK waa recently rated 20th out of 27 countries. In other words what is their contribution to the rebalancing and rebuilding of the real economy.

    If they're not doing any of these things or similar then their bonuses should simply be confiscated. Let's not tolerate this nonsense for one minute longer.

  • Comment number 29.

    @ #3

    Whatever your viewpoint on the bonus' situation, these investment bankers clearly are very talented - they've managed to:

    a) Not get fired
    b) Not get made redundant
    c) Earn s**t loads of money... again

    All at a time where out politicians are getting hammered for getting some dry-cleaning done whilst they try to solve the problems caused by the banking system... Maybe these investment bankers should stand for Parliament! If they could assure me that they could get a, b & c above to apply to me too I'd vote for them...

  • Comment number 30.

    "Barclays tells me that Barclays Capital in fact employs 23,000, so pay per head is in fact £196,000 - or a tiny bit less than what the prime minister earns."

    Come off it Robert; I expect the largest majority of employees are in supporting roles and earn less than 100k.

    Producing a pay per head figure avoids tackling the issue that some people earn much to much money for what they add to society.



  • Comment number 31.

    I spy a momentous opportunity coming up.
    Pay the bankers their hard earned bonuses in UKP Sterling.
    Meanwhile the UK joins the Euro.

    The bankers can do what they like with their Pound.
    It won't be guaranteed by the taxpayer though.

    What does it matter if the UK suffers just like the Greeks are.
    Heck, at least we would be rid of the bankers.
    Things could only get better.
    Where have I heard that before?

    If the bankers want to buy goods and services. Good. Let them. But at an exchange rate of our choosing.
    Just don't let them try to work their magic with the Euro though.

  • Comment number 32.

    #26. onward-ho wrote:

    "18 John the hairshirt..."

    I see I have found my mark. You are unable the explain the morality of monopoly banking profits - as it is indeed impossible to explain such perversion. The whole of your position is devoid of rationality.

  • Comment number 33.

    Plus ca change.

    To be fair let's list all the good things Barclays have
    done to help small businesses ,...

    1) .......

    Er, I'll come back to you on that.

    The IB is organised gambling,



  • Comment number 34.

    Onward-Ho: I've read your comments over time with interest; you're clearly a lefty based on your previous posts. But you are supporting the most grotesque form of right wing capitalism there is in this blog. I don't understand unless, frankly, you are being deeply sarcastic to the point that it is lost on us all, including myslf, the most synical and sarcastic person I know...

    Can you clarify how your position today supports your previous comments as they look deeply at odds?

  • Comment number 35.


    "...while RBS discloses another whopping loss..."

    "Royal Bank of Scotland to award around £1.3bn to executives in its global banking and markets division"

    RBS ... are showing "restraint".

    Awarding bonuses for whopping losses is showing restraint? Can't quite get my head round that one.

  • Comment number 36.

    The collective actions of the banking sector is the biggest recruiting sergeant for public dissent, civil unrest and social revolution I can think of. Like the governement, bankers have become their own worst enemy.

    Keep pigging out at the trough guys! The longer you gorge, the bigger the backlash. The bigger the backlash, the more chance you'll bring your own rotten system down upon your heads.

    Keep stuffing your pockets and public support for the Tobin Tax will be the least of your worries.

  • Comment number 37.

    34 Bryn The Cat
    THE WHEEL DOES NOT NEED TO BE RE-INVENTED, IT JUST NEEDS TO START SPINNING AGAIN.

    If a fatcat gets a £2m bonus and £1m gets paid in tax that is enough to keep 100 families who are out of work housed and fed and clothed who would not otherwise be.

    We might not like these guys and there financial thingummyjigs but look what happens when they are not doing as well as they usually do.

    We must welcome the rich, as it helps look after the poor.

    Without them we would be like a skint Soviet state in the eighties.

    Think out of the box Bryn , there's room for everyone in Britain.

  • Comment number 38.

    #36 warwick

    You are right. The more this nonsense goes on the more public will realise how banking works.
    Also the more they will realise that they have been had.
    And that it has gone on for years.
    And they will wonder why. And how to stop it.

  • Comment number 39.

    37. onward-ho:
    "We must welcome the rich, as it helps look after the poor."

    New Labour already tried that. And failed. Remember Mandelson: "we are intensely relaxed about people getting filthy rich"?

    And thus began the boom. Lots of people got filthy rich. Executive pay levels soared whilst that of the workers stagnated. The gulf between the haves and the have nots widened rapidly , and is now at its worst for decades or more.

    Trickle down does not work. It is myth. It is garbage. Or offal.

  • Comment number 40.

    OK,

    So RBS have made so much money that they can afford to pay out mega bonuses to their bankers, yet the bank is 84% state owned and my taxes are going up as a result!

    Ridiculous!

    Why not just use this money to pay the government and taxpayer back instead!

  • Comment number 41.

    34 39 Trickle up isn't much use though, is it, if we all end up poor.
    Give a poor man ajob and he isn't so poor anymore, and for all the ranting about Labour, there have never been as many people in work , nor have benefits for those not working been as fair , and those in low pay have been protected by minimum wages and tax credits.
    To continue, after paying £1m tax on his £2m bonus, Mr Fatcat buys a 300k cottage in the country, paying 6 k stamp duty, 5 k to his lawyer, the estate agent and his staff get 5k, then he spends 200k doing it up , 10 rural construction workers work at it for a year,10k gets paid in VAT ,he puts his remaining 500k in the bank, and with this money, until 2008, the bank raised another 5 million pounds, which then allowed them to lend 50 young couples a 100k mortgage for their first home.
    I am sorry what is so evil about money circulating around and generating jobs and keeping the hospitals open with the tax generated?
    If that is offal , garbage , a myth, it is what has kept us going for the past 60 years and it is a heck of a lot better than any alternative green,non-profitmaking ,worker's dystopia.

  • Comment number 42.

    41. onward-ho

    Are you sure you're not Gordon Brown?

  • Comment number 43.

    #20

    What a blinkered view! Yes bankers may be successful at making money, but that is because they are in a game where the rules are that long term they will make money, because that is their job. It doesn't need that much talent. The point is that give them a difficult job they would fail just like politicians fail. They have just got into a business where success is easy. If you don't understand that you can only be a deluded banker.

  • Comment number 44.

    39. At 6:22pm on 13 Feb 2010, warwick wrote:
    37. onward-ho:
    "We must welcome the rich, as it helps look after the poor."

    New Labour already tried that. And failed. Remember Mandelson: "we are intensely relaxed about people getting filthy rich"?

    ==========
    You must remember, Mandelson is Socialist Royalty, the 'We' means him, as does the 'people getting filthy rich'.

    The Bankers Bonuses, if they came as coins would have the words "Made in Downing Street" printed around their edge

  • Comment number 45.

    37. At 5:58pm on 13 Feb 2010, onward-ho wrote:
    34 Bryn The Cat
    THE WHEEL DOES NOT NEED TO BE RE-INVENTED, IT JUST NEEDS TO START SPINNING AGAIN.

    If a fatcat gets a £2m bonus and £1m gets paid in tax that is enough to keep 100 families who are out of work housed and fed and clothed who would not otherwise be.

    ========
    If the fatcat bonuses came about because of QE, then we could have not QE'd for the fat cats, and kept 200 families who are out of work housed and fed and clothed who would not otherwise be.

  • Comment number 46.

    41. onward-ho

    Like I say, nice theory on paper, but history and reality has proved it simply didn't work. Hence the divide between rich and poor is larger than ever, and grew rapidly during the boom.

    I repeat, in the last few decades, in the City, lots of people got very rich, very quickly, at a rate not seen since the industrial revoltion, and the poor got poorer. This happened.
    Is that what you aspire to? A society comprised of an elite of the super rich and a massive struggling crime infested underclass that get to live off their crumbs. Oh goody. I'll look forward to that.

    Minimum wage is a good thing, but pointless without a maximum wage to balance it out, because as the wealth gap increases, in the more deprived areas and for the working classes whose wages continue to stagnate, minimum wage simply becomes the most that the majority of people can aspire to earn.

    Society does not need more rich people whose taxes provide welfare for the poor.

    (when they can bothered to pay those taxes: Off shore tax havens-Non doms-Many rich people paying less percenatge in tax than even their cleaners. etc etc.)

    Society needs to accept that greed is not good. It is vastly desructive. It has brought our society to its knees.

    You need to learn from the lessons of history. If you can't learn, and at the moment, the governement and the city are showing no signs that they're learning anything, then you can't move on and you can't grow up.








  • Comment number 47.

    #37. onward-ho wrote:

    --------------------------------------------------------------------
    ...
    If a fatcat gets a £2m bonus and £1m gets paid in tax that is enough to keep 100 families who are out of work housed and fed and clothed who would not otherwise be.

    We might not like these guys and there financial thingummyjigs but look what happens when they are not doing as well as they usually do.

    We must welcome the rich, as it helps look after the poor.
    ...
    -----------------------------------------------------------------

    You are fundamentally wrong!
    It's not the bankers' bonus that helps the poor, it's the working / middle class person with a decent job producing some value that supports both the greedy and the poor.

  • Comment number 48.

    Just read a report about a Goldman Sachs worker who illegally copied their HIGH-FREQUECY TRADING software for whatever personal reasons. Gosh, the existence of such software has confirmed my long-standing view that in the electronic age stock markets have little to do with investment, or development, or technical progress, or social value, or any value at all. They provide a tool for bankers to line up their pockets, full stop. The fact that deals can be accomplished over a millisecond means that whoever tracks the market value faster has an edge. Forget investment strategies (let alone long-term strategies, laughing stock really), just try to beat everyone on speed and you guarantee a healthy shaving of everyone's money. To put it simply - this is because you will react before everyone else does. By the same token, forget price fixing laws - you can fix prices with you competitors within a millisecond, no phone calls, no exchage, your software will do it for you. This does not sounds cool to me, this sounds like a scam on a fantastic, grand scale. Not only that, high-frequency feedback must be a key to market instability (any physics graduate would understand that) which is precisely what the brokers want because instability is a key to comissions. It seems that any sensible frequency-damping mechanism, be it a transaction tax or obligatory cool-off time, etc. should not only stabilise the markets but hopefully push them back to ecenomic reality, which is investment in development and enterprise. Is this ever going to happen or is the elite too corrupt?

  • Comment number 49.

    Gives a new meaning to "bank robbery."
    In fact makes the old-style of bank robbery almost respectable.

    As for the "best staff" brain-draining to Zurich or Singapore (why not Las Vegas?) if they don't get a big enough bonus, can't happen quick enough. Then banks can concentrate on their core business and leave speculation to the speculators.

  • Comment number 50.

    41. At 6:42pm on 13 Feb 2010, onward-ho

    I can't help scratching my head and trying to figure out if the trickle-down effect from the rich is to be expected and welcomed, then how come billions go missing every year.
    http://www.taxjustice.net/cms/front_content.php?idcat=103
    Maybe they go down to the safe deposit box and polish the coins once a twice a year.
    When a cleaner at an office is paying a higher proportion of their income in tax than the trader, then you do have to wonder that maybe, just maybe water does indeed flow up the mountain.

    Skeptics in Westminster is something that really needs to exapand across the country if we are to understand what is really going on.

  • Comment number 51.

    #48 nonvegetarian re: HIGH-FREQUECY TRADING

    Fixing this anachronism would actually fix many of current problems including splitting banks in investment / commercial and bankers' bonuses.
    And if you think it's only natural, the stock market is a benefit for the large society if investors do their job. Buying something only to sell it the next time slot has nothing to do with investment, is pure speculation and it only benefits the speculator.

    They have to agree on some cool-off time, it's just ridiculous otherwise.

  • Comment number 52.

    Does anybody know how much of the 'investment money' available to these Bankers comes from the Pension Schemes of the Plebs like me?

  • Comment number 53.

    How can it be possible that these people are rewarded with bonuses for trashing the country?

    The problem with rewarding people with bonuses is that what gets measured gets done but nothing else. This has been a problem which those of us in real industry - you know muck, sweat and brass - have been fumbling with for decades. We concluded about 20 years ago that bonus payments just don't work unless they are profit related to the whole business.

    So in a world in which a perspective had been established that challenges the perceived benefits of bonus payments as they distort output and profitability, it is then contrived to reward the employees of financial institutions with bonuses. We then conspire to be astonished when the entire financial services industry goes broke. What did you expect!

    It is time that the post-medieval incentive of the bonus is thrown in the dustbin. Surely, if these bankers are so gifted that they require financial incentives greater than the norm to do their work, then a they could maximise their reward by acting as independent operators and invoice the bank for the work done. This would mean that the capital put at risk would have to be financed by the independent operator before they could claim their profit. This would make the whole process a lot less fun, the risk would go to the operator and not the bank, and both the operator, the bank and the shareholders could cash in on the reward.

    In an environment in which the taxpayer is effectively putting up the collateral for all these very profitable deals bonuses are quite unacceptable as it is the taxpayer who takes the risk. This issue has moral hazard written all over it.

    It is an utter disgrace that the New Labour government has conspired to do absolutely nothing from stopping this obscenity taking place. The public must ensure that the next government has a mandate to end this disgusting farago which has nothing to do with markets but is no more than a public subsidy for vandals. The bonus system is out of control and must cease immediately. It is a scandal. If the bankers want to go elsewhere and wreck another country then they have my permission to leave. It would be nice to live once again in an economy dependent upon adding real value.

  • Comment number 54.

    Bankers bonuses is a rather fortunate occasion to ponder on some wider statements and questions: What reasonable human being of more than average abilities, sound moral values, with proper education and a family to provide for would go to Parliament?
    We are not a belly button of the world. If there are people in the remotest corner of the globe willing to do our job at least equally well and for a fraction of our income the bankers will invest money (not least our pension savings) in them rather than in us – that's the rule of the game called globalization.
    There are jobs that are difficult to transfer and they will stay put. Housing, roads, energy distribution, education, healthcare must be dealt with locally and FINANCED LOCALLY (I read China has 70% of its taxes collected and invested locally – seems rather democratic to me). Relative, not absolute, cost of these determines plenty in our HDI (I would exclude GDP PPP from this one altogether). A tangible lever of control over these costs make us much more democratic than general election does.
    There must be an agreement on wider than G “summit” of any force (1, 2, 7, 8, 20 – doesn't matter) platform on which level of income disparity is acceptable locally and globally. A low income disparity on a local level in one place though makes global disparities larger. (Or, arguably, a great local disparity drives investment out of the country – because highly hierarchical systems are less flexible, less efficient and because those at the top of local hierarchy tend either to prevent foreign investment as a measure of curtailing competition, or, indeed, capture invested funds and reinvest them back abroad. If a global system of investing funds exists (and it does) every community that is not too rich, large enough and cohesive enough to accommodate investment will be rewarded. The global fund allocation system though will produce a global income disparity as a by-product: The profits will stay in “safe heaven”.
    Japan is a good example of difficulties in preserving social cohesion: in short in the 80' people were given money they were not used to manage. They showed “lemming mentality” which landed them in an ocean of debt. Big business decided not to give them any money any more, rather to sponsor them via low interest loans to the state. At this point a concept of moral hazard may be widened: It's deeply humiliating to have one's honestly earned money given back as a government subsidy.
    Mises and Hayek thought that we are capable of more (in my perception their works are an ultimate appeal to the affluent on how to manage their liberty without infringing liberties of all the others). Implicit in their works is some deep trust in human social spirit. Reality seems to prove them wrong again and again. Mature business keeps sponsoring the state that in turn protects business. A really huge part of business is supported by the state. The bank bail outs are apparent on the surface, but the bundle of various subsidies to the individual lets businesses get away with paying wages below subsistence level! This is another side of monopolized economy and huge income differences, that drive prices beyond reach of most. That's the circle that draws countries into huge deficits... The money that should have landed in peoples pockets goes through a complicated redistribution process at an imposing cost.
    Now, coming back to bonuses and going in some other fellow footsteps, we can imagine, that, bankers deciding prudently, 30% of the bonuses will land on property market. Half of it won't be an leap up the property ladder but, rather, an investment. This money is supposed to bring profit though. So, given the circumstances (no state sponsored house building) this will push another 1 or 2% of the population out of the housing market and into letting market (sponsored heavily by the state). While some are motivated to earn more, others are motivated to earn less!
    Generally: businesses will continue to sponsor the state hoping for great rewards in return. Let's call it a result of virtual money filtering into the real economy through intelligent agents. Generally any amount of paper/electronic currency issued is bound to sediment in rather few pockets/accounts in a short time. This time over the state made it the easiest for them: they wouldn't even had to bother building all these motorways and bridges! Guaranties to the banks, money into the stocks, stocks up, some organized stumbles on the way (oil, Dubai, Greece) (so here you got it Onward Ho' s sarcasm explained)

  • Comment number 55.

    Wow on-ward how you really have been taken in by the emperor’s new clothes. Just like the clothes the bankers profits are an illusion. The monkeys you referred to earlier could have made money in the last 12 months, given that the so called 'worth their weight in gold' bankers caused the asset value crash and liquidity crisis, which then meant they had to be bailed out with free money at 0% interest. They then just ploughed this free money back into equities and other asset classes causing another asset value bubble.

    The real output from your bankers is to saddle the world with huge amounts of debt and shift the output curve to the right, which is a permanent loss of output potential. However all the while they are destroying value they are having a free ride and further destroying value by selling sort and compounding their worldwide recession. They deserve big bonuses for this, don't make me laugh. They deserve spraying with the equivalent of DDT, like the locusts they are.

  • Comment number 56.

    Oh for heaverns sake leave thsd Bank alone.

    What about the Salarys of faceless BBC executives

    Defending the level of pay, a BBC spokesman said: "The BBC is extremely conscious about the public's feeling about top salaries in the current climate and that the salaries we pay are met by the public, but we have to balance that with the need to attract the best professional talent in order to produce the high quality programmes and services licence fee payers expect."

  • Comment number 57.

    Yeah John by comparison they are negligible, and the worst they can be said to have done is make some dodgy programs, and give us Jonathan Ross (a cardinal sin). £ for £ i'd say the BBC is value for money... how much did it cost me to bail out the banks... god knows but we'll be paying for it for years. Oh look this website is the BBC's and it is practically free. However had you mentioned Football players or the cost of public sector pensions i'd have at least agreed with the ludicrous amounts of money being wasted.

  • Comment number 58.

    So, the British public provide a large slice of the funds that these guys are gambling with...
    The British public are taking a massive slice of the risk (as we've seen from the last 2 years)...
    But when it comes to dishing out the "profits".....where do they go?.....into the bankers' pockets, of course.
    They might give you 1% on your savings, but want 6% if you borrow anything.
    What was that blokes name?....Shylock? was it?
    Oh, to be a banker, instead of having to live in the real world.
    I think we would all like a detailed explanation from the banks as to just WHY these people are paid so much...perhaps that would satisfy so many of us.
    I know that a good deal of international cash is involved, but the risk element has changed, and what makes the UK public see red is...
    We provide the money, we take the risk, they take the rewards.

  • Comment number 59.

    The western banking system is insolvent. Attempts to rescue the banks has merely created sovereign insolvency. Some countries are obvously insolvent (Iceland for example) and some are in the process of being revealed as insolvent (Greece) and others are pressing on with delusison ((UK). But they are all insolvent and this will be revealed in the fullness of time.

    Widespread sovereign insolvency has consequencies - few of them are good. Everyone will be required to accept these consequences.

    The people getting paid $ millions understand this - for them it is not controversial. They are not delusional. They want the money as they are hoping that it may enable them to survive in what will be a radically different environment.

    Through their greed they are providing a service. They are are a beacon flashing out a warning. They are preparing to survive the best (or only) way they know. Everyone needs to prepare to survive.

    Look at them - learn from them. Neither delusion, envy, anger, disgust, fear, confusion, nor hopelessness will save anyone.

  • Comment number 60.

    armagediontimes:if we all prepare really well to survive it will make survival of none almost guaranteed! (Weren't we all at these 50', 60' and 70' on both sides of an iron curtain)

  • Comment number 61.

    I think everyone should read post No 59. That man says it all. Everything else is dust in the wind.

  • Comment number 62.

    There was a very large study done to try explain the role of bonuses as a form of motivation in business. They asked lawyers to take on a special case for $30 / hour and they said no. They asked lawyers to take on a special case for free and not only were they likely to say yes, but they would do a better job than if offered a big fat bonus.

    The conclusion was that even lawyers, a sector of ultimate money grabbers, see themselves as part of a story, and doing something that makes their own story seem really cool will drive them to do great things with little or no consideration of the money involved. Offer them $30 / hour and you undermine their worth. Offer them big bonuses, guaranteed, and they know they dont have to shine to get a bonus, so they don't try too hard.

    Apply that ethos to the banks and you have to think the whole system could have been reinvented for next to nothing, and the protagonists would have basked in the glory of their achievements for the good of the nation - and then been (rightfully) showered in bonuses by a grateful public.

  • Comment number 63.

    37 Doomsters, I have had a rethink!

    The £2m bonus man , apart from paying his £1m+ in tax, also has his employer paying a million lovely pounds in bonus tax this year.
    So why is everyone but me disgusted at these bonus payments, when 2/3 of it , plus all the indirect and other taxes the million he's allowed to keep will generate, goes straight to the taxman?
    His 2 million generates MORE THAN 2 million in tax!

    If that is not wealth redistribution to help the poor and the sick I do not know what is.


    50copperdolomite
    Next, offshore dosh.
    Conventional widom says it is a parasitical , evil business.
    But actually ,offshore cash is something the UK is actually really good at attracting and generating.
    And we had to be, with the horrendous tax levels which made the retention and growth of wealth in UK impossible, in a period in our history which exactly matched our relative decline.
    When income tax was 97p and inheritance tax 83% it did not seem to do much for Britain apart from most of all the nice houses got turned into horrible nursing homes or were demolished.
    It was not fair that the state should act as a commy thug.
    Thank Goodness Labour saw sense and even Gordon does too, though sometimes he forgets it and goes into a Robin Hood mode which is ill-advised but usually temporary.
    We in Britain even better at dealing with offshore cash than the Americans, and most Europeans apart from the Swiss.
    Think Cayman Islands, Channel Islands , Gibraltar,Isle of Man,Bermuda etc....all have a British or Ex-British twist and all actually employ lots and lots of British people.

    The Germans, the Americans, everybody wants to clamp down on what is a very British success story.

    I do not think we should let them.

    Fatcat, I love your banker's weight in gold comment.
    But if Iwas Gordon Brown, would you lot be so gloomy?

    no1important .....you sound more like no1malcontent.
    Cheer up and why were you not out on a Saturday night?
    Now I too thought that the banks' losses were appalling and immoral......
    and sometimes I get a headache.... but that doesn't mean I don't need my head .....and when I open my eyes and it's getting sunny and Ismall the roses, it's good to be alive.
    Let the bankers enjoy their day, they had a rotten time last year , alot of their pals gotr sacked and all of their shares were stuffed.
    Ask yourself this question ......
    ... would you really want to work in a bank?
    I once did and all the money in adsp-cam's designer bourgeois sackcloth wouldn't have kept me in that cctv'd and airfreshened prison.

  • Comment number 64.

    Bla bla bla...

    Well feel free to continue venting your bitterness and envy, masquerading it as social conscience or supreme intelligence, but nobody give a toss about what you think as you can see...though delusion might help the ego of a few here.

    All this “casino” banks, bailing out of the banking sector by the public, bankers bashing and the poor public as innocent victim just reflect the crass stupidity of most of the postings. A numbers of banks did not price the risk in their business (easy to see which ones now!). The regulators and the governments not only closed their eyes but supported it because at the time this was providing cheap funding first for the public and second for companies, let alone huge tax revenue for the government. Though it should not have been beyond the reach of people to know that living on cheap and massive credit/debt is not sustainable. You wanted it, you got it! Now look at yourselves, learn to live with it and stop whinging like assisted people!

  • Comment number 65.

    2/3rds of the loss which caused the RBS collapse was because of their purchase of ABN AMRO. this buy out was made in conjunction with Santander and Fortis. Barclays were also in the frame for this. It is very easy for Bankers to be blamed in all this, but it really is not their fault. How many banks can survive when people want to take their money out? In the UK the Bank problem helped the government deflect blame from their own incompetent policies and also the MPS expense scandal - it was very easy to blame the greedy bankers. The truth is Britain would have been up the creek a long time ago had it not been for the banks - the british economy has been surviving for many years on consumer credit fueling the economy cheered on by gordon brown. We may complain at RBS and the tax payer bail out, but the truth is the government has got its hands on a nice asset cheaply and has EU permission to keep running it - I am sure it will make a healthy profit as it seeks to offload the asset. So before you blame the bankers - blame the politicians for poor regulation and encouragement to the banks to increase loans (they are still doing this also look at Lloyds) and we must blame ourselves for borrowing more than we could afford - if the personal debts of people in the UK exceeds that of all the sovereigns in Africa, something is not right

  • Comment number 66.

    A kitchen is a place for making meals. It is designed to do that job. The chef will follow well known recipes and maybe tweek it a bit. Occasionally they will do a 'what if ....' and a new recipe is created, but it will usually be a new combination of familiar ingredients and familiar processes. I give the chef some money and they give me food in return and keep some of the money themselves for their effort.

    A bank is a place for making money. It is set up to do that. Researchers look at businesses and for the most part follow a set of rules which enable them to evaluate the strengths and weaknesses, this gives them clues about how the business can be developed, merged, taken over or ignored. They then ask the 'what if...?' question and hopefully they end up with something which is more valuable. They have made money. I, through a pension fund ISA or some other way, give them some money. They make it into more money and keep some for themselves.

    I (unless I am acting in the role of a banker) wouldn't give a chef money and expect him to make me money because his business isn't set up to do that. Bankers make money because they are in a business which is designed to make money. A banker may by applying some of the methods of their trade help a chef improve his business.

    The point is that what the majority of bankers do is apply a set of rules and help businesses. Lots do the job well, but then that is what is expected of everyone in any job AND THEY DON'T GET MASSIVE BONUSES. I can accept that there are some bankers who may be exceptionally perceptive and can spot a good deal more often and more successfully than their peers. Just as there are more successful chefs, footballers etc. Their levels of achievement are measured against the standards usually expected in their chosen activity. So Raymond Blanc (for example)gets paid more than many chefs in restaurants that are slightly less excellent. Wayne Rooney gets more than a stiker who score slightly fewer goals (probably football isn't the best example to have chosen, but the principle is there)

    It seems however that every investment banker gets a massive bonus - even the average ones and that is crazy. Only the most successful should get bonuses. To do the job of an investment baker does not need exceptional talent, it needs training and experience. With that experience comes an ability to evaluate risk, but ask any gambler and they will tell you it is about evaluating the odds and luck - talent doesn't come into it.

    Bankers pay themselves what they want to pay. I just wish that they would not dress it up as well earned money for talented people. For the good investment banker the skills needed are not particularly rare. I hope they could admit that they are greedy and that their talents are realtively commonplace. But such an admission would be hard for some to live with.

  • Comment number 67.

    #48

    Well it seems that your physics graduate are not very good as otherwise they would know for complex systems that minute high frequency feedback is what is needed to stabilised an unstable system, the opposite will generate resonance and massive fluctuation. Maxwell wrote about this in 1868...not really new!

  • Comment number 68.

    And by the way, using the same inept and stupid statements made by RP and most of the people on this blog there is nobody at £64 a week, the AVERAGE weekly earning was around £490 in 2009!

  • Comment number 69.

    thanks to these morons i do not have a job. where is my slice of the £2.2billion??????? my three children are also extremely happy that the Bankers (feel free to replace the B with a W) forced us to abort our holiday in disneyland - where is their slice of the £2.2????

  • Comment number 70.

    Why on earth did these so-called and, most likely, self acclaimed 'talented' bankers ever get or deserve bonuses in the first place? Exactly the same goes for overpaid, petulant footballers & film stars.
    Would the huge salaries and bonuses not be better going to someone who actually does something worthwhile and for the benefit of others such as nurses or teachers? Someone who actually has a 'real' job?

  • Comment number 71.

    I dont mind anyone earning a good living, but surely there must be some sort of moral and ethical criteria involved. R.B.S. are proposing over£1billion in bonus payments. Having duped its customers of even more money in its share options is it not time to repay some of the support from its loyal customers . My poor mother has so far lost over £35000 and I dread to thnk how many more shareholders there are out there contemplating suicide. Are the R.B.S. bonus recipients happy about accepting money that is rightfully their customers ?

  • Comment number 72.

    Re 64 Darksurfer.
    You may well be right....
    Many of us are "crass" or "stupid".
    Many of us are more interested in whats going on in Eastenders than we are in our financial future.
    Many of us can't resist masses of credit when it's thrown at us.
    THAT'S WHY WE HAVE BANKERS.
    And who was responsible for the disastrous 125% mortgage ot the "self-certification" mortgage?......bankers, of course.
    And who arranged for millions of US homes to be sold to the poor, then jacked-up the interest rates, turning suburbs into ghost-towns?....bankers.
    And who thought "We want some of this dodgy selling-houses-to-the-poor action"?...bankers.
    And who is supposed to know when to put the brakes on when we are getting into the financial mire?....bankers.
    And who is supposed to know when property and asset prices are getting dangerous and threaten the economy?.....bankers.
    And who took over a hundred billion in bonusesin the dodgy years, on "profits" that did not exist?...bankers.
    The public didn't cause this mess...the bankers did.
    Perhaps the horrible truth is....bankers have got used to pocketing a fortune, just for going to work, and don't want it to stop.
    Darksurfer, you think that many of us on here are fools......but the biggest fool is.....

  • Comment number 73.

    And how on earth can the chancellor 'ultimately approve them.'? Is he really that stupid? Is Gordon Brown that stupid? Perhaps it might not be a bad thing to take a look at the probably numerous bank accounts belonging to the members of cabinet

  • Comment number 74.

    They are paid more than the Prime Minister? So what I don't have much faith in his ability to manage the country anyway. Also politicians always seem to come out fine financially (eg Mr Blair) so I'm sure they have 'other interests' that pad out their earnings.

    I have, in the past, bought a number of managed funds that perform badly, far worse than the tracker funds. I have little faith in the investment staff and would guess that only 50% outperform the market (ie their results are fairly random). This view is reinforced by reading The Drunkards Walk. Presumably there are studies that prove that 'Paying For Performance' really does work?

  • Comment number 75.

    #72

    "Many of us can't resist masses of credit when it's thrown at us."

    You named who YOU thought the fools are. Personally I call this greed!

    Interesting to see how the world will be changed when the majority of the people are fools who cannot resist greed according to you...I cannot wait!

  • Comment number 76.

    Interesting rant from Edward Conway .....

    http://blogs.telegraph.co.uk/finance/edmundconway/100003753/the-financial-reporting-bubble/

    I wonder who he's talking about!

  • Comment number 77.

    Sorry Edmund

  • Comment number 78.

    And if the "will only work if I get millions" brigade won't take a share in the losses, that is not called "salary" or "bonus"....that is called "holding the public to ransom".

  • Comment number 79.

    Re 72: stevewo

    And who was responsible for the disastrous 125% mortgage ot the "self-certification" mortgage?......bankers, of course.

    - No, that would be retail banks and the likes of Fannie Mae / Freddie Mac, which are US govt owned and directed.


    And who arranged for millions of US homes to be sold to the poor, then jacked-up the interest rates, turning suburbs into ghost-towns?....bankers.

    - No, that would be mortgage advisors and IFAs. And the Fed, who control the interest rates.


    And who thought "We want some of this dodgy selling-houses-to-the-poor action"?...bankers.

    - No, that would be pension funds, insurers and the like. Their desire for "low-risk, high yield products" (as denoted by the credit ratings agencies) drove the trade in MBSs. Oh, and the public, who liked the idea that you can buy cheap and sell expensive after applying a lick of paint.


    And who is supposed to know when to put the brakes on when we are getting into the financial mire?....bankers.

    - No, that would be central banks and governments, who are actually supposed to have the best interests of the economy at heart rather than short-term political positioning.


    And who is supposed to know when property and asset prices are getting dangerous and threaten the economy?.....bankers.

    - No, that would be the central banks and governments too.


    And who took over a hundred billion in bonusesin the dodgy years, on "profits" that did not exist?...bankers.

    - No, there wasn't much bonus dishing in the "dodgy years". You just made that number up. Don't even get me started on asking you what you mean by "profits".


    The public didn't cause this mess...the bankers did.

    - No, it was in fact a combination of rapacious public greed, incompetent economic management from a variety of central banks, outrageous political profiteering from the likes of Gordon Brown, insufficient risk-management and inappropriate pricing from the investment banks, unscrupulous lending and insufficient risk-management from financial advisors, mortgage companies and retail banks, lax and poor quality regulation on the part of the FSA and others.

    But as you've bought Gordon and Alistair's line that "it wasn't us guv", perhaps you might get what you deserve at the next election.

  • Comment number 80.

    the only plus about this is we the taxpayer don't own them
    check out billy braggs no to bonuses campaign

  • Comment number 81.

    does the taxpayer's share of RBS count for nothing?
    if paying lower or no bonuses means these companies lose the idiots who caused the recession then blamed the government good ridance i say
    why should webe paying them

  • Comment number 82.

    79 Leplonk
    You're right.
    Bankers and core-financial folk really are wonderful people...
    Selfless, community-spirited, lovely, warm human beings with the interests of the public at heart.


  • Comment number 83.

    Did I miss something? I thought they'd been broken up to make them too small to give a hoot about.

  • Comment number 84.

    #82. stevewo wrote:

    79 Leplonk
    You're right.
    Bankers and core-financial folk really are wonderful people... "

    Ha... Ha... (slow hand clap)

    All except, the regulators who were (and indeed are still - although |I can't think why?) employed by the people to manage the monetary aspects of the economy. We paid these plonkers to manage the economy so as to save us from our worst excesses and prevent financial collapse. Didn't they do their job well!!!! (ps fire Mervyn King etc.)

  • Comment number 85.

    Yet again it is the shareholders who are losing out. We have suffered from a collapsed share price, dilution of share value through the rights issue, no dividend followed by a 1p per share div and now it looks like we are being shafted yet again while the top dogs in Barclays seem to have carte blanche to award themselves whatever they want. Reward the shareholders and lower end staff for a change.

  • Comment number 86.

    Re 84 JohnfromHendon...
    I have to agree.
    The regulators were asleep for years.

    Investment bankers and all others should be "well paid" if they are successful.
    But there are about 60 million Brits and 250 million Americans who don't like "plunder".

  • Comment number 87.

    On-ward-how

    I worked in banking for 8 years, not as a banker but around them and rubbed shoulders with them, I left to look after my terminally ill father. So you don't need to tell me about who'd want to be a banker, and they had a hard time last year. They wouldn't know a hard time it it bit them on the rear. So they work long hours big deal I used to regulary pull 90-100 hour weeks so there argument about compensation for hard work is just hot air to me. As for why I was not out last night because I was working. Given the current ecconomic climate I am working even harder now to keep the wolf from the doors, and as I have my own business other people rely on me too, all the more harder due to the bankers actions.

    I am not bitter on the contrary, but I can't just sit there while you wax lyrical about how wonderful and beneficial they are and how much they deserve what they get, when the evidence is to the contraty and I am speaking from experiance.

    But do not worry about my social life, I will be in London next weekend for a friends party and in two weeks time I'll be in Poland on a stag do.

  • Comment number 88.

    #81. desabled wrote:

    "does the taxpayer's share of RBS count for nothing?
    if paying lower or no bonuses means these companies lose the idiots who caused the recession then blamed the government good ridance i say
    why should webe paying them"

    As Robert's blog says, RBS would be in even greater trouble were it not for its Global Banking & Markets division, which is generating huge profits. I don't know what proportion of the bonuses that RBS will be paying will go to GBM, but it seems only fair that those who are generating the profits should be rewarded. And we, as taxpayers with a huge stake in the future profitability of RBS, should be glad that the bank is able to retain the people who are currently keeping it afloat.

    There is way too much ignorant anger on this blog, and barely any rational analysis.

  • Comment number 89.

    68. At 09:35am on 14 Feb 2010, darksurfer wrote:
    And by the way, using the same inept and stupid statements made by RP and most of the people on this blog there is nobody at £64 a week, the AVERAGE weekly earning was around £490 in 2009!
    ----------------------------------------------
    You should know perfectly well that you cannot link the pay of the lowest earners to any kind of average. The average figure tells nothing except the average!
    There are plenty on £64.30 as this is the level of JSA. There are also plenty on £0 who do not qualify for any support. This does not mean they are not looking for work.

  • Comment number 90.

    Re #82/86: stevewo and #84: John_from_Hendon

    This just illustrates exactly why you feel angry, and exactly why your anger is misplaced. Investment banks, retail banks, mortgage advisors, and all the rest are NOT employed to manage the economy. They are not employed to save you from your worst excesses. If you have been labouring all these years on the false impression that there were an army of people working in The City who were making sure you weren't going to mismanage your finances or go into negative equity, then I do understand why you are so aggrieved, although I'm not sure how you ended up getting misled into that obviously ridiculous belief.

    Further, nobody here is saying that bankers of one description or another are "selfless, community-spirited, lovely, warm human beings with the interests of the public at heart". I don't recall anybody pitching the financial services industry in those terms. Even the CEO of Goldman, who made the infamous "God's work" comment, wasn't trying to claim that everybody's in it for the public service. Your retort is irrelevant nonsense. You simply can't accept that the targets of your spite might actually have a reasonable point of view, and so you turn to sarcasm. Bravo.

    People who ARE employed to look after the economy are the Chancellor, the chairman of the Fed, the MPC at the Bank of England. Even Fannie and Freddie, who are US govt run. Incidentally, I'm of the opinion that a return to the days when your bank manager was your best friend and your feared enemy may be no bad thing, but personal finance is a very different beast to investment banking and the global economy.

    stevewo and JFH, get over yourselves, stop wallowing, and start listening when people try to put the other side of the story in reasonable terms. You might just learn something and be of some use when it comes to fixing the issues in the financial services sector and the global economy as a whole.

  • Comment number 91.

    If ever there was a reason for a Robin Hood Tax, it is the seemingly weekly stories of various bankers receiving huge bonuses. show you support at www.robinhoodtax.org,

  • Comment number 92.

    We have been given the fingers in our face.

  • Comment number 93.

    Re 90 LePlonk...
    O.K. I'm listening.
    Please tell me in detail why bankers are entitled to so much money after a bank-induced collapse, leaving an economy almost wrecked.

  • Comment number 94.

    LePlonk 90 - excellent post.

    Investment bankers are the same mix as the rest of those - its just through a mix of good luck, choices and hard work they have ended up in a profession that is currently highly paid (over paid if you like). Despite what you might believe they are not all together banging a drum saying "we want our bonuses or else" - they are just employees like most of the rest of us - they just currently work in a market where that is the going rate. Bank boards currently believe that these are the rates they have to pay to retain their best staff - I'm not sure how that blame can be laid at the feet of the employees.

    For all those on here commenting against it - how many of you have or ever would turn around to your employer and say actually I think I'm being paid too much? How many would be happy knowing direct peers are being paid more for the same job regardless of your own salary? How many would not go work somewhere else if work conditions including salary were better for the same job?

    As LePlonk says investment bankers were not responsible for the economy, the risk management of the industry or even the risk management of their company - their job is to make money investing and trading. They are no more responsible for the crisis than the engine makers and GM are responsible for the failure of the company.

    A maximum wage is a good idea - if it is enforced unilaterally across the globe. As this will not happen the UK going alone would damage the UK.

    Like it or not the UK has built up a competitive advantage (and reliance) in banking and finance and the only way for the UK to exit this crisis in the short term is to ensure that this remains the case.

  • Comment number 95.

    Despite the impression that others may have, I don't think that 200,000 is excessive, if these guys are good at what they do.
    The problem is that bankers will soon be back to putting another nought on the end if we don't keep whinging.
    And bitter experience shows what that leads to...

  • Comment number 96.

    #67. darksurfer commenting about #48 re high freq trading

    >>>>> Well it seems that your physics graduate are not very good as otherwise they would know for complex systems that minute high frequency feedback is what is needed to stabilised an unstable system, the opposite will generate resonance and massive fluctuation. Maxwell wrote about this in 1868...not really new!

    That's not true. Instability comes from positive reaction (*) (feedback). Rapid response helps but rapid response with positive feedback will still produce instability.

    (*) positive reaction = in the same direction as the current development

  • Comment number 97.

    Stevewo - whinging will have very little to do with it one way or the other.

    I think the majority of qualified observers have also agreed that bonuses didn't cause or even play a significant part in the recent financial crisis.

  • Comment number 98.

    97. spike1606 wrote:

    >>>> I think the majority of qualified observers have also agreed that bonuses didn't cause or even play a significant part in the recent financial crisis.

    Bonuses are related to short-termism and this surely played a significant part in this crisis.

  • Comment number 99.

    Short termism on behalf of shareholders wanting returns I agree. But if bonuses hadn't have been in place we'd have ended up in the same position - bonuses were a sympton of short termism not a cause of it.

  • Comment number 100.

    For those who hate banking and finance:
    Yes, it is disgusting that people are making a bag of money out of currency fluctuations that are killing the rest of the economy. It is sickening that bank bosses feel free to give large bonuses, when they have been rescued by taxpayers, who cannot save that amount in a lifetime. However, that may all be a drop in the ocean compared with my main criticism of the UK’s B&F sector. That is its failure to support the UK’s manufacturing industry during the last half century. We might have been much better off if all our banks had been taken into foreign ownership. German banks seem to appreciate that, though they may make money trading money and paper, in the long term, the basis for that money and paper is manufacturing industry.

    For those who love banking and finance:
    It wasn’t the job of B&F to run the UK economy; that responsibility falls on UKgov. Since the end of World War II, successive governments have, overall, failed miserably to do so. We have not had stable interest rates, stable currency, stable industrial relations, a reliable source of finance for our industry in difficult times, governments sympathetic to growing new industry or helping existing industry. If you are in the money business and the pound is oscillating like a yo-yo, it makes more sense to speculate on forex than support an engine manufacturer. Under the circumstances, I completely understand why B&F forgot that, ultimately, if it wants to exist as a sector in the UK, it needs a UK manufacturing industry just as much as the man in the street needs a job.

    For both groups:
    At this point, we have a big B&F sector, on which we are over reliant. We need a lot more than that and should concentrate our effort on creating something other than B&F. We need it as a base for B&F and, much more than that, to have a robust and prosperous UK.

 

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