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RBS's Hampton: 'Journeymen' bankers are paid too much

Robert Peston | 21:50 UK time, Monday, 17 January 2011

Large numbers of bankers are paid more than they're worth, the chairman of Royal Bank of Scotland has conceded, because of what he calls a "gangmaster" culture in investment banking.

Philip Hampton

 

Sir Philip Hampton, interviewed by me for a documentary to be broadcast on BBC2 at 2100GMT on Tuesday (Britain's Banks: too big to save), says:

"The star quality, as it were, seems to filter down to people who don't seem so star quality. There is, if I can use the expression, a sort of gangmaster cultural phenomenon in this, that you recruit top people who really do make a difference, who really do move markets and get business and are really high achievers.
 
"But they do tend to associate themselves with people who aren't such stars, but they want them around and they trust them, sometimes they move with them and there is a team associated with it. And the disparities between the top stars in the team and some of the journeymen players, if you like, is probably not as marked as it should be."

Inevitably some will see similarities with Premier League football teams, in which even quite mediocre players earn tens of thousands of pounds per week, because that's the going rate for the Premier League.

Hampton says that when the real stars leave, "they take their clients and their business with them, and we see this routinely". That's why RBS feels obliged to pay huge bonuses to these top performers. But it is "one of the major challenges" to reduce the pay of the more average bankers in the teams assembled by these stars.

Hampton also implies that investors have been irrational in allowing banks to pay huge bonuses. He says:

"This explosive growth in financial services meant that thousands of people, arguably tens of thousands of people, are extraordinarily highly paid. The most peculiar thing about it all, actually, if you look at the last ten years of massive increases in pay is that the performance for shareholders has been pretty disastrous really across most banks. Some of them have gone out of business altogether and most banks have had a relatively poor performance for shareholders".

Hampton's frank analysis of the flaws in the way bankers are paid comes as the boards of big banks decide how much to pay out in bonuses for performance in 2010. RBS is expected to award just under £1bn of bonuses in aggregate, down from around £1.3bn last year.

His remarks may exacerbate tensions in the coalition. As I disclosed in early January, the prime minister and chancellor have reluctantly come to the conclusion that they cannot prevent big British banks - even RBS, which is 83% owned by taxpayers - paying very substantial bonuses, lest these businesses are seriously damaged by paying less than the international going rate.

By contrast Liberal Democrat ministers - notably Vince Cable and Nick Clegg - remain determined to crack down on big bonuses.

In an interview on the Today programme this morning, David Cameron said:

"In a matter of weeks... you will be able to see both what is going to happen at, effectively, state-owned banks, where I absolutely believe they should not be the front-markers on bonus payments, they will be the backmarkers."

To put it another way, Mr Cameron expects Lloyds and Royal Bank of Scotland to be less generous than other banks in their bonus payments, but accepts they will have to hand out what most will see as very substantial awards.

Comments

  • Comment number 1.

    Wow, nice to see some honesty from a Bank, hopefully these comments might help make the argument that many many bankers are over paid!

  • Comment number 2.

    Surely this is the best argument for bonus regulation, preferably at international level: the bankers can't control the salaries of their own staff. The market has failed, and the Government/Governments have to step in to stop banks bleeding themselves dry for reasons of competition.

  • Comment number 3.

    "that you recruit top people who really do make a difference, who really do move markets and get business and are really high achievers. "

    Is that healthy, surely it shouldn't be individuals who move markets? This shows how far "markets" have come from the idea of "underlying value" and "price discovery".

  • Comment number 4.

    The mismatch in salaries is grotesque, even between Bankers and people in charge of running firms creating far more wealth---it's an oligarchy.

    But the solutions are obvious, and have been obvious for years; To legally link their own remuneration with a time bias: Delay the ability to cash in share options from 'all at once, right now' to some sort of tiered time periods... 1/3rd after 4 years- 2nd 3rd after 6 and the last 1/3rd after 10 years, for example.

    That would ten, at least, create behaviour more likely to mimic those Mittlestand type companies (in any country) who feel a commitment to the future, of the people who work for them, and the wider communties in which they operate--- the standards of service from the Banks have been in inverse measure to the rewards handed over by non executives.

    Communism, in theory, wasn't all that bad a system but cronyism and corruption did for it--it would be a pity if the same problems were allowed to do for shareholder capitalism and take Enlightened Liberal democracy down with it.

  • Comment number 5.

    Whilst there are indeed some stars, s with the premier league, you also need the non-stars to make an effective team. This was shown in the world cup last year where English stars failed memorably whereas the Spanish did not have all the best players in the world, but worked well as a team

    The thing is, that the whole team get the bonuses. More of interest would be whether the stars are the ones that lost money or not.

    By the way, I believe the UBS guys who were "punished" by having their bonus paid in Asset Backed Securities were doing really rather nicely from them, so perhaps they were not as bad as we were all led to believe

  • Comment number 6.

    " if you look at the last ten years of massive increases in pay is that the performance for shareholders has been pretty disastrous really across most banks. Some of them have gone out of business altogether and most banks have had a relatively poor performance for shareholders".

    Shareholders should be rattling the bankers cages, instead of waiting for innefective governments to legislate.

  • Comment number 7.

    On this idea that bankers will leave if not paid enough. The boss of Barclays is about to leave and yet he is to be paid a huge bonus. He's leaving anyway!! Why pay him a bonus?!!

  • Comment number 8.

    @yam yzf No. 5

    At the World Cup the English 'stars' were found out to be over-rated - and, therefore, over paid.

    Spain did have the best players, by the way.

    I take on board what you were getting at, though.

  • Comment number 9.

    Strategic proportionality and admission of runaway rights and privileges?
    No ... simples ... the rationale for 'massive bonuses' does not stand up to any kind of basic scrutiny ... it is not necessary to even consider the higher tier strategic and constitutional considerations as the bonuses are excessive and largely unjustifiable.

  • Comment number 10.

    The more we get to know the more apparently nearly 'criminal' and 'fraudulent' the banking cleptocracy seems to have become!

    It is quite obvious that we MUST insist that David Cameron's idea of a Maximum Income Multiple is implemented - and not just for bankers! No one in the country deserves more than 20 times the National Minimum Wage. One person cannot possible do more than 20 people and pay and/or income must reflect this.

    If bankers, footballers or TV 'personalities' want more the they are not part of the the Coalition's 'Big Society' as they don't give a fig for the mass of the British people and we should facilitate and encourage their one way permanent departure, whilst insisting that they leave all their assets here!

  • Comment number 11.

    What should now intrigue you Robert is even with such a continued onslaught these bonuses will be paid even to bankrupt RBS, why? Talent? Contract? Performance? Or is there something more? Clearly there is, a number of Conservatives know and are concerned, Labour (well those that were once in power) know, Vince has danced round it so to speak and unfortunately poor Nick is still struggling with what finace is.

  • Comment number 12.

    Surrounding themselves with mediocre. Talent what this usually means is when our golden boys drop golden balls there is always someone to carry the can when I worked for shell many years ago we had a real high flyer with a penguin in tow the only mistakes made on the eagles way up were made by the penguin who at the end of the day finished up as number two to our eagle times do not appear to change

  • Comment number 13.

    I cant see how there is any "star quality"? These are the geniuses, that through greed and incompetence, crashed the world economy and drove themselves bankrupt.

    With £3Trillion given to multinational banks by Governments, Central Banks and the IMF; government guarantees, Quntitative Easing, being able to borrow at 0.5% interest rates - what the hell are they doing with any "perforamcne related" pay element?

    Even then the spivs can't invest this money they have been given in anything that will help "real" people. Oh no, the money has to be speculated on commodities, jacking the prices up well over the level indicated by natural demand and to short European bonds causing huge suffering again to untold millions. Precisely the behaviour that leads to instability and the need for another financial crash and (they hope) bail out.

    Why are we allowing this to happen?

  • Comment number 14.

    The phenomenon of the "hangers-on" to the really talented being overpaid rings true. But the definition of the "star players" must also be brought into question.

    Continuing the analogy with Premier League star players. Just as those clubs that have the biggest haul of superstar talent seem to be the ones which bring home the silverware for their supporters, their opposite numbers in the banking industry should be bringing home the equivalent for their shareholders in the form of star-quality returns. But, as Sir Philip admits, most banks have performed relatively poorly for their shareholders.

    So one is forced to conclude that, unlike the the footballers, so-called star bankers, their less talented retinues and that the whole investment bank business model is all smoke-and-mirrors cooked up for the benefit of the highly overpaid staff but best avoided by those looking for a decent return on their capital.

  • Comment number 15.

    Ok where is the punch line – something’s coming?

    Why put yourself in this/that position, there is no need unless the revolution as started and people are moving their money away, what other reason can there be? Lets be open here; he as put his head in the lions mouth? Is he so cock sure of the ineptitude of Joe Public that he feels he can do this? He is kicking his staff, his shareholders perhaps he wants out and wants a golden handshake?

    He’s the chairman of the board and cannot dictate policy – some ones having a giraffe.

  • Comment number 16.

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

  • Comment number 17.

    Tough on bonuses and tough on the causes of bonuses. Banking represents a failure of competition and accountability to shareholders as well as shareholder indolence! There is no excuse when the government is the overwhelming majority shareholder. In addition to fair remuneration banking should ensure there is always contingency and succession planning. It is not beyond the wit of directors to retain
    or recapture lost customers - unless they are related to the departing over paid pre-madonnas!

  • Comment number 18.


    The general public provide a huge number of clients with relative modest wealth and financial needs. Sometimes they band together and have relatively large pots of pension wealth. They are UK based, unlikely to move, and it seems very likely that most of their needs could be provided for by high street banks. At the loss of some competition, it seems that it would be relatively easy to regulate such high-street banks, ensure they were UK-based, had limited operations abroad, and ensure that money raised for mortgage lending was done with long maturity dates to reduce the risk of liquidity problems in the event of a credit crunch (which the central bank would need to fill).

    The same high-street banks also seem well placed to provide banking and other services for small to medium size enterprises in the UK.

    With regard to investment banking, if these are kept at a distance from the general public (and their pensions), and small and medium size businesses, and isolated from dealing with the high-steert banks, surely then investment banks are less able to inflict finacial damage to the point where a government rescue was needed.

    This leaves the investment bankers to big business and rich investors. Since these investors / businesses have deeper pockets and are much more able to take legal action, they should be better placed to assess risk and take legal action when things go wrong. Finally, UK investment bankers should be run as traditional partnerships with unlimited liability, not limited liability companies. Unlimited liability allows bankers wealth accumulated in the good times to be taken back in the bad times, if it turns out they were incompetant or took unreasonable risks with their clients money. Unlimited liability also means that investment bankers would watch each other for signs of incompetance.

    If many investment bankers leave the UK because they can't risk unlimited liability, then perhaps they are not worth having. I am sure, like some law and accountant firms, there will remain investment bankers which agree to unlimited liability in return for a proportion of client business that would see it as a committment worth having.

    Then investment bankers could earn as big a bonus as they want, and contribute to government taxes at the same time. Everybody is happy.

  • Comment number 19.

    It must be clear from this that pay for many of our "top people" (a meaningless term in the light of Mr Hampton's comments) is completely nonsensical. Perhaps the best approach to dealing with these problems would be to reform the minimum wage. Suppose we legislate for a minimum hourly rate of £5.93 or 0.0025% (5%pa) of the he annual earnings of the highest paid employee of the organisation the employee works for, whichever is the higher. If a business is genuinely successful, then sure - pay the boss accordingly, but recognise that that success also springs from the hard work of many employees. A company that is successful can surely afford to pay all its employees well.

  • Comment number 20.

    @10 - John from Hendon

    Your are SPOT ON !! It is about time that, as a society we 'resect' the cancerous greed mentality which is ruining the very essence of a decent civilization...

    I am all for 'earning' a large salary and benefits etc etc BUT when things have gone out of control, as they have done, then WE ALL must re-evaluate and ACT not stand idly by.....

    I really support a wage culture for those employed by big corporates and other organisations..... Why can there not be a ceiling of 20 x the lowest Full time salary of that organisation....
    If a hard working bank teller working for RBS earns £16k per year then the MAX in RBS should be £320k per year........ If RBS does well then the bank teller gets an increase and therefore the Max increases.......... That's democracy isn't it ?

    I think this is an idea which works across all companies, football teams, entertainments 'celebs', Government bodies etc etc etc ........ Any surplus monies go to investors (25%) and to the community / society (75%).....

    If however you are a business owner, someone who has ''RISKED' their own finances to create a business or you work for yourself then the rewards should NOT be capped....

    I am sick and tired of people in companies and big organisations 'hiding' or lying low and not putting themselves up and risking it.....

    Did you know that CEO bosses of FTSE 100 companies earn 88 times the median wage !? That's up from 47 times a decade ago......

    It's a gravy train for a select few and it is WRONG.... something is wrong with it all...

    (To those thinking I am some mad Leftie - I am NOT, I work for myself and do well BUT I want a better society than this!)

    Regards
    Ganretti

  • Comment number 21.

    6. At 22:52pm on 17th Jan 2011, MS1949 wrote:
    " if you look at the last ten years of massive increases in pay is that the performance for shareholders has been pretty disastrous really across most banks. Some of them have gone out of business altogether and most banks have had a relatively poor performance for shareholders".

    Shareholders should be rattling the bankers cages, instead of waiting for innefective governments to legislate.

    -------------------------------------------------

    But they won't, because most "shareholders" are not individuals at all. They are other financial businesses whose bosses also get big bonuses simply for doing their jobs. They won't be rocking any boats any time soon.

    This is why unrestricted markets don't actually work

  • Comment number 22.

    the truth hurts the bbc too much

  • Comment number 23.

    While it's refreshing to hear Sir Philip Hampton admit that the disparity between the highest achievers and their coterie is not borne out in their pay packets, it really is no suprise. It seems that the insistence on high bonuses by the thousands of people who get them is both sinister and ludicrous. It is sinister, since even our own government (elected to keep publicly trading bodies accountable amongst other things), are frightened of the banks. The CEO's and their side-kicks have told the coalition that a reduction in bonuses will lead to a poorer return in the long run. Essentially they are saying the banks cannot be held accountable by the shareholders. Despite the fact that recent history has demonstated that the independence of banks was almost catastrophic to our economy, very little has change.

    What would be helpful, if ROBERT PESTON, could do it for his readers is if we could be told the proportion of the following sums relative to each other:
    The amount of money lent by the taxpayer to the banks in UK: The size of the profits of the banks concerned in the UK; The size of the bonuses collectively across the banks; The rate at which the borrowed money is being repayed to the tax payer.
    This proportionality or relationship between these sums, might cast some light on what is really going on.

  • Comment number 24.

    Look. Take the bonus money! Pay the tax. Then write a cheque for what's left after the tax is paid. Write it to Comic Relief. Write it to Children in Need. Do something BIG. Do something BIG HEARTED. Surely goodwill will (gradually) be created!

    Ask yourself: what if Goldmans, HSBC, and the other banks' bonus masters started to compete for the size of cheque they hand over on the "live" BBC TV show. Imagine that totaliser after Bob Diamond stepped down from the stage... Imagine the end of the film "Rat Race"... Imagine pigs flying...

    Imagine Mark Thomas scaling sky-scrapers around the world if they don't...! ;)

  • Comment number 25.

    If banks continue to make massive profits, they will continue to pay staff large bonuses for helping them achieve this. I agree that the banking sector, rather like the premier league in football has got ridiculously carried away with figures being banded around that seem out of this world.

    Unfortunately, the government cannot do anything about it, as they have found even when owning the majority of a bank, because until there is international consensus on the way banks operate and remunerate staff, the threat of banks leaving the country and damaging the economy will remain. The government is currently being held to ransom by banks threatening to go abroad if they have to pay taxes on their massive profits.

    Surely sooner or later people will realise it is ultimately unsustainable...surely more people will start doing finance degrees and therefore the supply of bankers will increase until the wages start to fall? Even the most pig headed of bankers must realise the basic economics of it? Or do they really believe that they are the ultimately talented elite that deserve to be paid millions for simply managing risk and return (and not very well)?

  • Comment number 26.

    What perplexes me is why, with credit still deemed to be a problem for businesses, are my small savings of little interest (excuse the pun) to the banks. Interest rates for savers are terrible, credit for businesses tight (obviously made worse by foreign banks leaving the UK, I know), and bonus payments back in style. I would have thought they would be delighted to have my savings.

  • Comment number 27.

    24. At 00:24am on 18th Jan 2011, Ben wrote:

    That's a bit like the farmer taking his ckickens to the fox's den and throwing the ladies in.

    The days of Dickens, when the poor were dependent of charities are long gone. We took the responsibility the poor from the charities and gave it to government for many very fine reasons - charities can't do the job - and we pay tax to ensure the poor are looked after properly, or at least we did when we were civilised.

    They should just pay their taxes, contribute to society according to the width of their shoulders rather than buying solid gold loo seats.

  • Comment number 28.

    The question is not why do they pay large bonuses but why do they make such large profits? Why are their prices not decimated? Most bankers do little for them, living parasitic like on the backs of (the struggling backs of) the real economy.
    The gambler banks are a different issue, but even with them there are pricing issues.

  • Comment number 29.

    Excellent. Bankers bonuses again. Yawn.

    In a capital market environment as in a capitalist society supply and demand dictate the cost / price. Artificially reducing the price / cost leaves two alternatives.

    1. Circumvention of the introduced regulations and a potential loss of taxes on pay and bonuses.

    2. Departure from the market place to other less rigorously regulated environments.

    Neither is an attractive proposition for the tax payer or treasury.

  • Comment number 30.

    Robert,

    just heard your piece on Radio 4 where you state the BoE want more power to be able to stop a housing boom next time. At no point do you ever suggest the BoE was in part culpable for the last housing bubble. Merv King and co sat on their hands for 10 years whilst this country was put under severe strain by the housing bubble.

    Good to see the BBC is also "like a hawk" when it comes to reality.

    Second story on the business segment this morning:

    Snow 'caused slow housing market'

    http://www.bbc.co.uk/news/business-12206936

    "Heavy snowfall during December led to "lacklustre" activity levels in the UK housing market, according to surveyors."

    Here, let me fix that for you....

    "Heavy snowfall during December led to "lacklustre" activity levels in the UK housing market, according to surveyors, who have a vested interest in the market picking up"

    ps hope you and your highly paid BBC colleagues were all cosy in your massive houses :-)

  • Comment number 31.

    Another day, yet another blog on bankers/bonus...
    Does anyone else think there is a POLITICAL AGENDA to continuing this focus on bankers (rather than the government's bloated spending/debt pile which is the cause of the cuts)

    HERES A GOOD QUESTION FOR EVERYONE....

    Q. what would you say to a person earning £25,000 a year, with a credit card bill of £17,924 and who was adding £2,850 to the credit card every year (oh, and by the way the credit card rate will go up if they dont show how they will pay down their debts). WHAT ADVICE WOULD YOU GIVE THAT PERSON?

    A. Well, those numbers are actuallyt the national equivalent of theUK...the problem is nuymber blindness, MILLIONS, BILLIONS, TRILLIONS, make it very difficult to conceptualise the UK dilemma.
    According to the Office of national Statistics, the UK income (GDP) for Y/e March 2010 was £1.4trn, the credit card bill (debt £1trn) and the deficit (£159bn). Those figures map onto the example of a person.

  • Comment number 32.

    If the banks have being paying underachievers, the staff that do not deliver performance or profit, who is the stupid ones? The staff or the bankers for paying the bonuses on small performances?

    And the interview alludes to the crews that go from bank to bank with their clients seeking out pay, conditions and bonuses .. so do these bring profit and performance to a bank? It is not the lack of regulation in the banking system that caused this condition more management who cannot work the difference between profit and costs.
    As I have always thought staff that bring in business, profit and enhance a business do warrant a reward, but is the bonus in proportion to the business they do? Seems not the rest of the world.

  • Comment number 33.

    Mods - why has my post suggesting that surveyors have a vested interest in saying the housing market will go up been referred? I'd say this is totally obvious and also, +gasp+, the truth. I watched Gilligan's film "Brazil" last night. Brilliant! I'd say their Information Retrieval department would have let such a statement through. Perhaps we are now living in a more restrictive environment?

  • Comment number 34.

    Pot calling the kettle black?

  • Comment number 35.

    oops. Delete Gilligan. Sub Gilliam. Still a great movie.

  • Comment number 36.

    Hoorah!
    Someone has seen the light!
    The public have been saying this for years.
    What is so special about these folk?
    Or is it just that they controlling their own purse-strings, and will hold the country to ransom if anyone interferes?
    Well paid if they are good.....yes.
    Chronically overpaid.....no.
    Number-shufflers are no more important than tanker drivers, energy workers, police officers, medical workers etc.
    The financial industry across the world has been living in its own dream-world for years, bankers and governments must wake up to reality, particularily as the financial industry is now the cause of so much hardship.
    Only one industry blatantly deals in greed.....it's time for it to stop.

  • Comment number 37.

    Journeymen journalists are paid too much as well, Mr P.

  • Comment number 38.

    If you work in an ordinary company the shareholders are Gods: everything rides roughshod over making a return to your investors: staff don't matter, customers only matter inasmuch as they provide the continued funding but if you are in a facultative monopoly like rail, water, gas, electricity and telecomms; you can shaft your customers to feed excessive profits to your shareholders.
    Banks it seems are different: they shaft the shareholders to feed the greed of a few pampered employees and in doing so cause massive instability to the economic infrastructure of the many. Why aren't the banks' shareholders doing more to stop this reward for failure culture?

  • Comment number 39.

    The focus on bonus is naive. It should be on total compensation. If people are overpaid it doesn't matter if they get the money in salary, shares, bonus or pension contributions. The theoretical benefit of bonus to employers is that it's not a fixed cost (like salary) and in tough times they can remove it - as they can for underperforming employees. But in investment banking it seems the performance related variable component (bonus) has almost become fixed.

    I agree with previous comments on income differentials in the UK. I also agree this shouldn't just be targeted at investment bankers. And rather than legislate for maximum incomes, I would do it through the tax system. If an employer wishes to pay any employee more than 20 times the total compensation of its lowest paid employee then it can do so - but the excess above the 20 times benchmark could not be offset against profits for corporation tax purposes. So the employer would have a choice - large internal pay inequalities would lead to higher tax bills.

  • Comment number 40.

    I once read about in experiment (was in a newspaper, so it must be true ;-)) that investment bankers were pitted a group of chimpanzees to make investment decisions. The chimps won hands down. Luck trumps knowledge (???) every time in this business.

  • Comment number 41.

    @ "Sir" Philip Hampton:

    > They do tend to associate themselves with people who aren't such stars

    Dunderheads, in other words.

    I've known this for years, so why has it taken so long for it to sink into the skull of "Sir" Philip Hampton? Why should a "top" banker be so slow on the uptake?

    If he's so sluggish, what are the others like?

  • Comment number 42.

    @ 1. At 22:10pm on 17th Jan 2011, mark wrote:

    > Wow, nice to see some honesty from a Bank, hopefully these comments might
    > help make the argument that many many bankers are over paid!

    "Sir" Greedie (the predecessor of "Sir" Philip) was certainly one of the "people who aren't such stars". Banking has many such dunderheads. "Sir" Philip could even be one of them himself!

  • Comment number 43.

    @ 5. At 22:40pm on 17th Jan 2011, yam yzf wrote:

    > I believe the UBS guys who were "punished" by having their bonus
    > paid in Asset Backed Securities were doing really rather nicely from them

    Thanks for letting us know. We won't let that happen again.

  • Comment number 44.

    Ah, the age-old spectre of green-eyed jealousy..

    To anyone commentating on how deeply, scandalously unfair it is that us nasty bank employees paid such huge amounts (and, in ellipsis, how easily you could do the job for half the money) - why not come try it? After all, all the major banks have easily navigable careers websites.

    Trust me, my line management would jump on the chance to replace me with someone of my competence and business-specific skill set for half the price.

    If you can't be bothered or don't have the requisite abilities, stop whining about the "unfairness" of it all. In a meritocracy there will always be losers. Deal with it.

  • Comment number 45.

    This coming from a man who was paid £700k in 2009 for attending 13 meetings. Methinks pot calling the kettle black!

  • Comment number 46.

    kal @ 44 - in the current context I am not entirely sure what you are hoping to achieve with that comment.

    I appreciate you do not agree with some of the other posters but the "let them eat cake" mentality is counter productive and seems to hint at a deep insecurity. My suggestion would be that you try to understand the anger expressed in so many posts (after the bust and bailout to dismiss it as jealousy is silly) and to make positive suggestions as to how to improve the Nations financial sector.



  • Comment number 47.

    44. At 09:31am on 18th Jan 2011, kalokagathia wrote:

    Ah, the age-old spectre of green-eyed jealousy..

    To anyone commentating on how deeply, scandalously unfair it is that us nasty bank employees paid such huge amounts (and, in ellipsis, how easily you could do the job for half the money) - why not come try it? After all, all the major banks have easily navigable careers websites.

    Trust me, my line management would jump on the chance to replace me with someone of my competence and business-specific skill set for half the price.

    If you can't be bothered or don't have the requisite abilities, stop whining about the "unfairness" of it all. In a meritocracy there will always be losers. Deal with it.


    --------------------------

    Shouldn't you be working? :)

  • Comment number 48.

    So Sir Philip concedes that paying the huge inflation in rewards for the employees agreed by many bank boards has not been value for money for the shareholders.

    Any other business which had decided a strategy (that high rewards will bring high returns for the shareholder) and found it did not provide the required result would be required to rethink its business model.

    Clearly this model has not worked and the boards and senior managements as representatives of the shareholders are required to address it and look for a more rewarding business model for the shareholders or to reduce the risks to a level more consumerate with the return they are providing.

    If the clients are "owned" by these star teams - then there must be some aspect of working for a bank which these teams require to facilitate their business. Otherwise why not strike out on their own at their own risk like many hedge funds etc have done?

    It seems that in reality the banks are under pricing to these teams the costs and risk which the bank and its shareholders are taking relative to the returns made.

    The shareholders need to address the boards poor performances in permitting and allowing this state of affairs to continue for such a long period.

  • Comment number 49.

    This is COMMUNISM.
    The bankers have taken over the means of production.
    The bankers pay themselves massive bonuses.
    The Shareholders make a loss.
    Is this the stealth legacy of the last socialist government.

    Try this at your place of work.

  • Comment number 50.

    44.At 09:31am on 18th Jan 2011, kalokagathia wrote:

    > the age-old spectre of green-eyed jealousy..

    Ahhh – here we go again – the politics of greed from a geezer stuck in some office in London in front of a screen, toiling his life away. He can only justify it with an imaginary belief that others are somehow “envious” (of a banker???)

    > paid such huge amounts (and, in ellipsis, how easily you could
    > do the job for half the money)

    That's why banks can move to Swaziland or somewhere else in five minutes. Anybody, in any country, _can_ do it, and they know it. Retrain as a plumber, kid, while you still can. We're having our money back, so get used to being at the bottom of the pile (apologies to any plumber reading).

    > my line management would jump on the chance to replace me

    Who wouldn't? You even called yourself a “nasty bank employee ”. I couldn't have put it better myself.

    > my competence and business-specific skill

    Don't make us laugh! Look folks, some banker is blowing his own trumpet again. Nothing ever changes with that set.

    > In a meritocracy there will always be losers.

    Is there a mirror in your bathroom?

  • Comment number 51.

    #31. At 07:44am on 18th Jan 2011, nilihist wrote:
    "HERES A GOOD QUESTION FOR EVERYONE....

    Q. what would you say to a person earning £25,000 a year, with a credit card bill of £17,924 and who was adding £2,850 to the credit card every year (oh, and by the way the credit card rate will go up if they dont show how they will pay down their debts). WHAT ADVICE WOULD YOU GIVE THAT PERSON?

    A. Well, those numbers are actuallyt the national equivalent of theUK...the problem is nuymber blindness, MILLIONS, BILLIONS, TRILLIONS, make it very difficult to conceptualise the UK dilemma.
    According to the Office of national Statistics, the UK income (GDP) for Y/e March 2010 was £1.4trn, the credit card bill (debt £1trn) and the deficit (£159bn). Those figures map onto the example of a person."

    -----------------------------------------------------------------------------------

    The analogy using pesonal credit card debt has been used many times before and is extremely naive. I'm not saying debt accumulation bt governement is right but under the capitalist model it is supposed to be sustainable given linear growth, modest inflation and the rolling nature of the debt. The current assertion we need deficit reduction are really confirmation the system has failed.

  • Comment number 52.

    While everyone discusses banking bonuses a letter arrives from Nat West informing me that if I overdraw my account without prior arrangement it will cost me £6 per day.

    This is unlikely to happen to me at present, but I suspect, in the financial climate, that it will happen to other people, and that these will mostly be people who are broke.

    So a broke individual will pay £180 a month, in theory, for being £10 over their limit. Sorry but that is called usury.

    Not to worry though, Nat West are working hard to be the UKs most helpful bank apparently.

  • Comment number 53.

    @ 46. At 09:42am on 18th Jan 2011, Cassandra wrote:
    > kal @ 44 - in the current context I am not entirely sure what you are hoping to
    > achieve with that comment.

    He's seething with rage, Cassie. He thinks people are jealous – of bankers!!

    > the "let them eat cake" mentality is counter productive and seems to hint at a deep insecurity.

    Let him rip – he's only doing himself down. Keep up the good work, kal! With enemies like you, we got no work to do!

  • Comment number 54.

    10. At 23:15pm on 17th Jan 2011, John_from_Hendon wrote:

    No one in the country deserves more than 20 times the National Minimum Wage. One person cannot possible do more than 20 people and pay and/or income must reflect this.

    Actually that's not true.

    GDP per capita in the UK is somewhere in the region of $33-36k. If we multiply this by 2 and a bit to give GDP per member of the labour force that's around $75k.

    Revenues directly produced by me and my small sub-team (all relatively junior bank employees) in the 2010 calendar year worked out to be about $6m per head.

    Do the sums: my productive output is in the region of EIGHTY times the national mean.

    Given that I'm (unfortunately) not paid 80 times the national average wage, I'd say I have a pretty good argument that I'm currently being underpaid..

  • Comment number 55.

    #49. At 09:49am on 18th Jan 2011, onebadmouse wrote:
    This is COMMUNISM.
    The bankers have taken over the means of production.
    The bankers pay themselves massive bonuses.
    The Shareholders make a loss.
    Is this the stealth legacy of the last socialist government.

    Try this at your place of work.
    --------------------------------------------------------------------------------

    Actually it's fascism or state capitalism, certainly not communism. There is a modern phrase for it Corprorate State Colluded Fascism but that's a bit of a gob full so I'll stick to good old fashioned fascism.

  • Comment number 56.

    At last - a Chairman standing up for himself and his position on the Board! Philip Hampton is absolutely right. It took a non-banker to realise that the king has no clothes. I spent 20 years in investment banking and while there are a very small number of people who add large amounts of value for shareholders the majority are no different to the technocrats you'll find in any law or accountancy firm. So why are they paid so much more? Because it enables the layers of management to justify their own outrageous compensation. The worst offenders are the senior layer just below the board who manage to escape any public disclosure of the fact that they earn several times more than the CEO does. Most of these people if truth be known have very weak bargaining positions when it comes to pay. They don't own any client relationships or have any special money making skills. However the prevailing corporate culture of benchmarking pay against "peer groups" means everyone can find a survey to prove their own argument. What are most of these guys really worth? Just ask a few of those that lost their jobs recently and I think you'll find they've had a harsh reality check.

    So institutional shareholders - when are you going to wake up and put some pressure on bank boards? Philip Hampton, you actually hold all the cards if you only knew it. Cut the compensation of the senior management layer of your investment bank in half and see what happens. I think you'll be pleasantly surprised!

  • Comment number 57.

    #49, #55, amusing. So we label something and then what? It changes because we can all cry wolf and delete it from the wildlife stocks? No, it changes its colours or its name. Indeed, back to Peston's post..

    Journeymen bankers.... reminds me of Freemasons, don't you think? Now what journeyman, having been told by the writing on the wall that this game is up, will hang around playing this game? Those journeymen that played the banks have moved on. Where have they moved to? The Gold markets? The Stockmarkets? The Internet and Communications Industry? God forbid, the Food Commodities and Distribuition Industryies?

  • Comment number 58.

    54. At 09:56am on 18th Jan 2011, kalokagathia wrote:
    > Revenues directly produced by me and my small sub-team (all relatively junior
    > bank employees) in the 2010 calendar year worked out to be about $6m per head.

    That's just paltry chicken feed in my industry. I routinely operated £250 million pound machines, several at once, and sometimes operated a $1bn machine, out of Montreal. My team of technicians scanned continents, while your little group of bean counters fiddled around with a little small change!

    So get used to the real world chum – you're group is small potatoes in our domains, and you deserve nothing more than average wages. And that's what you will get in future.

    “Sir” Philip is right – there are a lot of spare parts in the banking industry, by the looks of things. On the other hand, keep digging, Kal - you're doing our work for us!

  • Comment number 59.

    54. At 09:56am on 18th Jan 2011, kalokagathia wrote:

    > I'm currently being underpaid..

    Diddums?

  • Comment number 60.

    Lets continue with Robert football analogy. It is a team sport. You can have star strikers and a useless goalkeeper and you win nothing (Arsenal fans are you reading!)

    Similarly in business by and large you need a team not just a single star. We applaud when a company such a John Lewis pays bonuses to all its staff but then complain when a bank pays bonuses to everyone in a particular team in its investment arm. Now for my part I agree with #39, the issue is not bonuses but total remuneration.

    John-from-Hendon: leaving aside the concept of confiscation of assets when someone leaves is blatantly illegal under EU law, and I know you are a support of the Euro so you must support EU law, the concept of a national maximum wage is patently absurd. For example how do you deal with a salesman on commission of say 10% - if a big contract takes him over the national maximum wage where is the incentive to do any work for the rest of the year? It clearly could not apply to people who invest their own money in a business because you have eliminated the incentive to invest. I suggest you go back to the 1970s when Labour imposed a 98% income tax (if you include the surcharge on unearned income) and look what happened, as the tax rate effectively imposed a maximum national wage. The whole thing was a disaster, tax avoidance became absolutely normal, many very wealthy people left and never returned. Ultimately it cost HM Revenue hundred of millions in lost tax

  • Comment number 61.

    54. At 09:56am on 18th Jan 2011, kalokagathia (A BANKER) wrote:

    "Do the sums: my productive output is in the region of EIGHTY times the national mean."

    -------------------------------------------------------------------------------

    Hilarious, a banker, productive output. I nearly wet myself reading that. Do you do stage work at weekends?

  • Comment number 62.

    60. At 10:25am on 18th Jan 2011, Justin150 wrote:

    > the issue is not bonuses but total remuneration.

    No. Those dunderheads caused mayhem through risk, and it was the rachet effect of the bonus culture that brought it on. They must have average remuneration and penalties if they fail. That's called moral hazard, and it will especially apply to bankers from now on.

    And we also have a lot of work to do on their culture, as the posts above by kalokagathia make clear. It's going to take a while to eliminate the egoists who are driven by greed and foolish hubris.

    Let's see humility, or they can go to Swaziland or wherever. Who cares?



  • Comment number 63.

    @ 54 kalokagathia

    I understand the mathematical logic of your post but it comes across as a poor excuse in trying to justify HUGE salaries.....Financial services are, by definition involved with huge sums of money which 'slosh' around the system. Do you honestly believe that because your are part of a money sloshing system that you (or your higher earning managers) deserve to ''take'' a percentage of the total value of that sloshing pot ??

    In that case, consider this.... A Hospital Doctor over his lifetime will help, maintain, patch up and repair 1000's of people whom all play a part in the bigger society...... By your logic should we therefore reward the Doctor on the value of all those he treats, all those related and therefore affected by those he treats, by the business he/she generates for suppliers by treating those people etc etc etc...........

    You bankers and other assorted top CEO's managers and footballers et all have ''lost the plot' over what is real and fair....... i direct you back to my post @ 20.........

    I want a fairer society and one which is worth being part of......... Your vision I suspect only CONTINUES the current shambles and quite frankly disgusting GREED mentality which is destroying anything of worth or Value..

    Regards

    Ganretti

  • Comment number 64.

    @60 Justin 150

    I suggest you look @ 20.. John from Hendon and I agree on some sort of structure here and I think it is something which actually would only affect a very small number in reality but then REALITY is what this few have seemed to lose !!
    If you work or create businesses to employ people and PUT yourself on the line doing so then YOU should be rewarded....

    But as an earlier post said (@ 61 Northseahalibut) Productive output can be seen in many different ways.....

    A bankers 'productive Output' nowadays would appear to be chasing commodity prices for a profit to the detriment of the people who need to eat, work, live and lead 'productive' jobs in the ''real world''.

    Regards
    Ganretti

  • Comment number 65.

    60. At 10:25am on 18th Jan 2011, Justin150 wrote:

    > The whole thing was a disaster, tax avoidance became absolutely normal, many
    > very wealthy people left and never returned. Ultimately it cost HM Revenue
    > hundred of millions in lost tax

    I don't think I noticed the lack of any “very wealthy people who left and never returned”. In fact, we still had plenty of them – too many, some might say,

    The 70's were great – good music and houses were far more affordable (thus people were far better off) for the whole of the 70's than they are now. In fact , the average family could survive easily, and afford their own house, with only one wage! Can you remember that?

    Now the average family needs two wages to pay for a bigger mortgage on a smaller house.

    So quit all this scaremongering – it's all trash. The only people worried about “wealthy people ” leaving are themselves! Let them go – I'm more interesting in roofing contractors and tilers, not toffs in London. Let them go, and give them a slap on the back. Britons will be fine, of that you can be absolutely certain. You just need a little faith in us, Justin.

  • Comment number 66.

    @ 61. At 10:27am on 18th Jan 2011, NorthSeaHalibut wrote:

    >> 4. At 09:56am on 18th Jan 2011, kalokagathia (A BANKER) wrote:
    >> "Do the sums: my productive output is in the region of EIGHTY times
    >> the national mean."

    > Hilarious, a banker, productive output. I nearly wet myself reading that.
    > Do you do stage work at weekends?

    His generation confused "moving money" with "making wealth". It was a very
    common misconception amongst beankers in the early years of this century.

    It took years to make them realise the difference. I think "Sir" Philip Hampton gets the message now, but the minions are still catching on.

  • Comment number 67.

    Nilihist 31.

    "HERES A GOOD QUESTION FOR EVERYONE....

    Q. what would you say to a person earning £25,000 a year, with a credit card bill of £17,924 and who was adding £2,850 to the credit card every year (oh, and by the way the credit card rate will go up if they dont show how they will pay down their debts). WHAT ADVICE WOULD YOU GIVE THAT PERSON?"

    Give up my job and become a banker.

    Assuming that such a construction of heartless fancy existed and they could stomach such a dull existance whizzing around an oppressive void of mediocrity and compromised morality where the only measurement is one of pounds sterling, dollars or yen.

    By the way your question is not a good one and it is not for everyone but does tell me a little about you. It is a statement of opinion that both generalises and makes a pejorative judgement about millions of people. Besides with a name like Nilihist my only assumption can be that you liked the idea of being thought of as a thinker but were unable to to spell Nihilist or get much below the surface of anything.

    Now here is my question.

    Why don't you do something kind for somebody who is poor and then see if you feel a bit less righteous?

  • Comment number 68.

    kalokagathia: I earn approximately £60k per annum plus pension contributions at 12% and consider myself well paid for what I do: which is sell software that helps companies manage their businesses better. I am certainly comfortably off and have no greeen eyed position on what bankers get: I just think your industry is parasitical now that it no longer fulfils a function that is of benefit to the people of this country. Interest rates charged on loans are usurious given the current interest rate levels and interest paid to savers is farcical. If all you do is rip off Peter to pay Paul a pittance and claim the rest as profit for your industry you are helping nobody and damaging many.
    What exactly do you do that "earns" you your huge salary and bonuses? What do you produce that helps this country to compete in a global market place?

  • Comment number 69.

    It's all crumbling for the banker-boys. None, not a single one, of their top tier have been able to muster an argument in defence of their disgusting behaviour. Bob Diamond tried to brush off criticsm - hopelessly - and now Sir Philip is turning on his juniors, presumably in a vain attempt to save his own loot.

    You really know the game is up when your boss tells the world his staff aren't worth it! I mean, did Sir Phil not do any leadership courses on motivating the troops - or, more likely, is he making a run for it?

    And he said it, at last, he said it. The banks have done a lousy job for their shareholders. So who do bankers benefit - the country (no it's going to cost us the thick end of £1tn to look after them, their shareholders - nope, we know they've been let down too. Why, the answer then is that they benefit themselves. End of story.

  • Comment number 70.

    Of course they are overpaid. On several measures...
    a) They are paid such an extreme amount more than either their employees or the average for the public that it is clearly obscene.
    b) They are paid so much because the banking industry actively works AGAINST adding to its 'talent pool'. I have nearly 30 years of software development expertise as a developer and manager shipping functional products on millions (yes millions) of high reliability high performance products. Yet I can't put 'bank' as one of my employers so I get NO - and I do mean NO - interviews for writing or managing software in a bank. They would rather pay 3 or 4 times the 'going rate' in order to poach from each other than bring in proven talent from outside. This goes on at all levels of the bank. Unless you were bought in by a mate with the same school tie as you left uni you stand no chance of getting into the 'blessed circle'. This means they can (and do) claim that talent is scarce and expensive. This means they can continually up the numbers.
    Ultimately though it is you and I that pay for this. In order to sustain these huge salaries and massive bonuses the banks have to (and do) charge obscene fees and massive interest rate markups (0.5% base rate, 30% credit card interest, 25% overdraft, 20% arranged loan). These charges make their profits look good to the untrained eye. BUT, every penny paid as salary or bonus is a penny taken from a company that could otherwise use it to invest in plant, machinery, people, product. Thus every bank profit means jobs lost to the UK economy where other business can't invest because of crippling bank charges and interest rates.

    It is really time the government took charge - we own two of the big banks. The government should set the level of bank salaries, bank bonuses, bank charges and bank interest rates for those two banks. They would be a LOT lower than they are now. True some of the 'top people' will leave - but these people got us in the mess anyway so they are no loss. True the share price on the bank would go down because the profit is lower. BUT - the upside - business would be able to invest, and that would create more profit and employment in the long term.
    Banks MAKE nothing, all they do is leach of people that do.

  • Comment number 71.

    Maybe I miss something ( and judging by many comments I do..) but why are bankers bonuses a problem? What is actually wrong about a bank paying its employees a bonus? As #39 said the Bonus forms part of the total renumeration package and allows a bank to regulate its employee costs.

    The bouns as I am sure has been pointed out many times is subject to income tax which is at a higher rate than corporation tax. For UK employees this then goes to HMRC. If the revenue paid out as bonus was instead subject to Corporation tax then this could be split over many countries dependant on the companies legal, if slightly whiffy, tax structure.

    Likewise many Investment Banks have for sometime only payed a portion of Bonus in cash with much being paid in stock options which incentivises long term growth.

    Retail banking does indeed charge high and pay low when it comes to interest and this should be looked at. But generally the bonuses paid to retail banking staff are low.

    So if the Investment banks do not pay bonuses with the revenues what do you propose they do with it? ( and giving it to charity is not a realistic answer as then so should all companies) Is there a better suggestion? What will help the UK more?

  • Comment number 72.

    There are a number of things that contributors to all of these debates miss..
    At present the clever investmentbanker/hedge fund manager can actually make a profit using financial engineering by destroying the value of companies/governments/banks... This happens because hedging ie insurance of an capital invested has been replaced by "downside betting" which goes beyond insuring the risk and gives a profit if a share/bond/ government lose value. The instruments to achieve this are also highly leveraged which means even riskier for counterparties.. AIG for example! Global laws restricting insurance of an investment to its original value as a maximum would stop this.At the moment the parasites that almost destroyed the financial world are still there waiting for this opportunity to occur again... and it will.
    Fundamental reform of markets needs to restore confidence and reduce volatility... If you want to trade commodities you should have to take delivery.Lets cut out the middlemen who are the ones who add to our real world end costs. In the share and bond markets.. If you wish to move the price or value of a shares/bond you should have to sell a proportion of the equity that reflects that value change.. In a world of geniuine long term investment there is no need for the 200/300x proportional change in prices that market makers (the big banks/funds again!) force upon us. Changing the tax system to reward long term investment is also an obvious idea.. Holding shares/bonds for longer increases confidence and stability.
    Just a few thoughts... All pretty obvious really... True markets are simple and
    honest.Our current system is so powerful and corrupted that the entire human race seems to be in its thrall. Maybe we should do something about it...

  • Comment number 73.

    Jacque Cartier wrote "I don't think I noticed the lack of any “very wealthy people who left and never returned”. In fact, we still had plenty of them – too many, some might say,

    The 70's were great – good music "

    There is an obvious answer. The Rolling Stones left the country and ended up down in south of France for tax reasons - produced great music though.

    I suggest you look at the proportion of tax paid by the top 10% of earners in say 1975 and compare it to say 2005, the tax rate went down from 98% to 40% but the top earners paid vastly more tax as a proportion of tax take. Going back to c 100% tax (which in effect is what a national maximum wage is) would simply result in the middle class and lower paid having to either pay mre tax or receive less services is that what you are trying to achieve?

    Did you never hear of the brian drain in the 1970s? That was all driven by tax rates.

    You also wrote "They must have average remuneration and penalties if they fail. " If by penalties you mean they get sacked well that happens pretty regularly now much more likely than normal blue collar workers - there is a good argument that the very insecurity of their jobs means remuneration is bound to be high to compensate. If you mean they should hand back some of their pay then presumeably you are happy to see that applied to everyone so, for example, cleaners on minimum wage should have pay docked if the hospital is not clean enough?

  • Comment number 74.

    73. At 12:54pm on 18th Jan 2011, Justin150 wrote:

    > The Rolling Stones left the country and ended up down in south of France ...

    .. making room for punk rockers, who were much, much better! Your argument is going nowhere, chum.

    > the top earners paid vastly more tax as a proportion of tax take.

    Then any rational person would want the others to be paid more, so they can take the “burden” off the “top earners”. Except for the greedy people themselves, of course.

    > If you mean they should hand back some of their pay then presumably you are
    > happy to see that applied to everyone

    No – Sir Philip Hampton didn't mention cleaners. Read the article in future.

  • Comment number 75.

    Justin 150 - couldn't agree more and I started work in the 40's so have a failrly long perspective!. I still feel that 'Hedge funders' are the ones to be stopped if at all possible in thei corrupt, greedy world.

  • Comment number 76.

    #74 you are a man who is clearly not willing to accept the Laffer curve.

    Lets put it into context, the Rolling Stones leaving the UK will have cost in the intervening years at least £150m in lost tax. Add in all the other bands in the 1970 who decided to take a year abroad to avoid tax and you are talking about a lot more than that. A load of film stars did the same (Sean Connery being the bet known). Then add in all the scientists who moved to US universities. Add it all up and you are talking about a very large amount of tax lost.

    The 1980s proved conclusively that reducing the top rate of tax from 83% to 60% and then 40% actually increased the amount of tax received.

    As for the crack the Sir Phillip did not mention the cleaners I suggest you read your own posts. You said "They must have average remuneration and penalties if they fail. That's called moral hazard, and it will especially apply to bankers from now on." All I am asking is why limit it to bankers why not everyone (it is so tempting to apply to politicians) after all fairs fair.

    #75: Why do you consider the hedgies to be the corrupt greedy ones? The EU own report suggested that hedges funds played nothing more than a very minor part. It is entirely arguable (and many have argued this) that hedges funds help shine a proper light on issues. What I would agree is that there is a major problem if there own trading is not subject to exactly the same transparancy rules as everyone else. Hopefully you will enlighten - I only have experience from the 70s so you have 30 years on me


  • Comment number 77.

    I'm really in two minds -
    While the pay seems grotesque and totally out of kilter with the average salary in the UK, be careful of what you wish for:
    - Do I put my hard earned savings or my pension in the hands of someone totally driven by personally benefitting from bonuses derived from achieving high returns, or
    - Someone who's 'doing his job' on an adequate salary but won't really see any personal advantage from staying late, working long hours, taking a few calculated risks.

    No doubt, in rewarding the real drivers of financial returns you end up sprinkling fairy dust on those who really don't deserve them.

    The answer surely has to lie in moving away from the focus on short term quarterly results and towards genuine long term economic growth or 5-10 years - and tying bonuses to that.

    Who does quarterly returns benefit anyway?? It drives companies to invest for the short term and bankers to take risk on immediate fees and short term gains whether the deal is good for shareholders in the long term or not.

    The point made about long term bank performance is highly valid. If I paid £5 for a share in a bank in 2000 and today its worth £3, really, whatever the bankers have done in the interim is irrelevant... all they have done is devalue the organisation they work for and shouldn't see any benefit for this!

    I don't expect the Government to take this view though... Having been involved in the public sector and large scale infrastructure investment, the biggest hurdle is the self imposed 'control periods' and 'comprehensive spending reviews'. This makes it impossible to plan or commit to anything beyond a relatively short time frame - afterwhich, it might be politically expedient to pull the plug.

    The Chinese are best at playing the long game and will, I believe, do extremely well from this over the coming decades.

  • Comment number 78.

    RBS's Hampton: 'Journeymen' bankers are paid too much
    .........................................................................................

    He must be reading this blog!

    Not only 'journeymen', CEO's as well, and 'talent'.

    This banality of course will not stop until our elected representatives do something about it.

  • Comment number 79.

    How much tax do very greedy/wealthy individuals pay? The real world studies that have been conducted would indicate peak revenue for a Government occurs at income tax rates of 65-70%.

    This ignores the fact that we actually want casino dwelling gamblers to leave so we don't have to spend trillions of pounds to bail them out again.



  • Comment number 80.

    Justin150 : are you seriously suggesting that we would lose anybody important with an income maximum of twenty times average wage (e.g 300k)?

    We would lose at most, a few hundred public sector workers - none of the brain drain in the 1970s you are talking about.

    We wouldn't lose any business owners or entrepeneurs as the maximum is a multiple of income.

    In fact the only people effected would be.... A small handful of free board members and if course casino operators/bankers.

    Sounds like the near perfect policy to me. Why dint you try askingmembers of the public what they think of a policy that encorages fairness, business effectivness and as a wonderful side effect encorages bankers and other spica to leave the country.

  • Comment number 81.

    Why any one needs that amount of money to live on beats me its so immoral...Let the high paid bankers go - there will always be somebody to take their job for less salary, a huge salary non the less, compared with the working man of today. Its a falicy to say we need the best men in the job... they thought they had the best!... but look at the state of the country!!!.. The Government don't rule - Bankers do!!!!... try living on 10.000 a year mate.

  • Comment number 82.

    Robert

    Just Watched your BBC 2 programme......... very good, disheartening and entertaining!!

    Your one comparison - All big banks are like 'HIV superspreaders' made me laugh out loud.......... How True, How True. A brilliant analagy............ I will use that from now on !!!

    The Banks are out of control - it is TOO dangerous to continue !!!!

    WE NEED TO CHANGE NOW .....!

    Currently Bankers and Banks / Financial Institutions = Criminal !

    and what a 'Twit' Gordon (prudence) Brown was, my goodness !!!

    Regards

    Ganretti

  • Comment number 83.

    Disappointing documentary Mr Peston, nothing new at all, is this a case of further BBC scaremongering for the New Year?!?

  • Comment number 84.

    I have just watched your documentary Mr Peston.

    Excellent.

    My belief that these people are just not worth these levels of remuneration reinforced. Time to stop and the time is now. Something about me wants to hunt down past bonus payments and exceptional pension 'pots' and get those back as well.





  • Comment number 85.

    Andrew Morton number 21-- wrote:....... But they won't, because most "shareholders" are not individuals at all. They are other financial businesses whose bosses also get big bonuses simply for doing their jobs. They won't be rocking any boats any time soon.

    This is why unrestricted markets don't actually work.

    _______________________________

    Agree completely---- just as Communism went bust abnsentmindedly, through cronyism, then I fear so may capitalism, and with it the real Liberal democracies which are an adornment to the History of Humanity... whether we stand around and wait for it to keel over (as the Communists did) or try and do something while there is still a little time is the open question of the moment.

    In small businesses shareholders take their duties as seriously as the executives and 'favoured stakeholders'---in large companies they don't because, as Post 21 says, those interests have been annexed by members of the group who themselves are 'inside the game'.

    IT's stating the blindingly obvious in a way,to say that has shareholders taken their duties as seriously as the execs then what happened 90-2007/8 wouldn't have---they didn't and it did.

    The key word is 'unrestricted'.... the reason the blindingly obvious stands restating is that whichever supposed kind of Government we have in power, they don't seem to get it..

    Welcome to the TeaParty UK

  • Comment number 86.

    How about GP's getting paid £150k+ from the public purse ? I think I could manage that sort of salary for issuing a prescription or referring the patient to somebody who actually knows something about the illness. In fact couldn't that be done by a website ?

    Then there's hospital consultants getting £600k (again from the public purse) for doing operations privately that they should be doing on their puny £200k salary !

    Don't get me wrong, I appreciate competent doctors but at least overpaid bankers are actually earning their money and contributing tax to the state unlike greedy doctors who are ripping off the state.

  • Comment number 87.

    I am surprised that the bank's owners (pension funds and other shareholders) are not demanding higher dividends rather than bonus payments. Pension funds are having to pay RPI (5%) increases in pension payments and need all the income they can get. If they don't get this income then the pension black hole will get larger. Surely it is the fiduciary duty of pension funds to squeeze banks for bigger dividends?

  • Comment number 88.

    "Inevitably some will see similarities with Premier League football teams, in which even quite mediocre players earn tens of thousands of pounds per week, because that's the going rate for the Premier League"

    The similarities are there for all to see. And blows out of the water the myth that banks need to pay top dollar for top talent. The simple fact is that mediocre footballers get massive salaries because the premier league is awash with money, some of it decidedly dodgy, and they frankly don't know what else to do with it. The premier league has far more money to spend on wages than can be justified by it's relative usefulness to society compared to any other level of football in the country, so that a premier league footballer will get 150K a week but isn't 500 times better than a non-league player who might get a few hundred quid per appearance.

    They will argue that if they don't pay these wages then the "talent" will go elsewhere, but where will they go to? Other leagues perhaps, but that only demonstrates that those leagues also have too much money. If the game of football as a whole had less money then the pool of global footballing talent would still be the same and the games wouldn't be any less entertaining, but the fans would have a few more quid in their pocket and the players a few less porsches to "forget" they own. Conversely, if they paid footballers twice as much as they currently do they wouldn't suddenly become twice as good.

    Do you see where I'm going with this? Banks pay big bonuses because the global economy is rigged in the favour of banks. They can make massive profits without even trying because the system is set up that way, just like the premier league. And they will continue to pretend the big wages are needed because if they didn't then they would have to admit that it isn't the abilities of these mediocre bankers that is generating the profits, but the system itself. And that would make those people in the general public still deluded enough to think big bonuses are a good thing very very angry.

  • Comment number 89.

    #76 Yes you are correct - Hedge funders are not, it would appear, subject to any rules other than their own. They know when they start out that what they are doing is wrong and, uncurtailed, will continue to not care. Shine a light into what they are up to as they are part of the general malaise and will spread like any other bacteria!

 

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