The case for bonuses
The end is nigh for the get-rich-quick remuneration schemes that were prevalent in banks.
That's pretty clear, given that even the City watchdog, the Financial Services Authority, today criticised the way that senior bankers were rewarded for taking risks that blew up their banks and the economy.
But is there no longer any respectable case for paying bonuses to any bankers?
John Varley, Barclays' chief executive, told me it was right and proper that he shouldn't receive a mega-bonus - but that surely it would be wrong for him to deprive mortgage advisers and branch staff of a few thousand pounds if they hit their targets.
His peers too have said to me that what went wrong at banks like Royal Bank of Scotland, HBOS and Northern Rock, wasn't the fault of tens of thousands of junior employees - so why should they be penalised?
The answer is the one given by the Tory leader David Cameron today, which is that if taxpayers hadn't rescued those banks then those employees wouldn't have jobs, let alone bonuses.
So perhaps all bankers should simply count their blessings that they work for banks perceived to be so important to the prosperity of us all rather than for Woolworths - where there was no taxpayer bailout and 30,000 were made redundant.
Here's the other bit of special pleading by bankers, which is that brilliant traders and assorted rocket scientists would defect to rivals if their pockets weren't stuffed with massive financial incentives (including the promise of bonuses).
Let's not examine whether these geniuses have made such a valuable contribution to their institutions or to the general good - or whether they might have brought western capitalism to the brink of collapse.
Let's just ask City head-hunters whether the market is booming for financially creative bankers.
Errr. What the head-hunters tell me is that there's always a market for good people, but - to put it mildly - demand is not what it was.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~14~RS~)
Comments
Sign in or register to comment.
This comment was removed because the moderators found it broke the House Rules.
It's time to call the bluff of all those in the City who claim to be worth silly money.
Everyone (except the fawning idiot Gordon Brown) knows that these are not the intellectual elite, just people with adequate academic qualifications who, through outdated and ill thought-out recruitment procedures, are found to fit a particular type of temperament.
They are not irreplaceable, as they will soon find out. It's time to restore sense to pay within the square mile - and perhaps this will flush out the greedy fools that have endangered this country, and introduce a rare species to the City... someone with a bit of integrity and common sense.
Complain about this comment
Perhaps if bonuses were paid in corporate shares which wereheld in trust for a minimum of three years this would help.
The bankers eligible would be able to get dividends from them from the trustees in the three year period but would be unable to sell them during this period.
Perhaps to sweeten the deal for high earners the shares after three years could either be taken as shares to hold or sold at the market rate. If sold at the 3 year date the value would only be subject to basic rate tax. This would placate the high earners and also ensure that bankers looked at least to the medium term.
It would also ensure that tax was paid on the bonuses rather than salted away abroad.
Complain about this comment
plan z
we're breaking down slow
slowly but surely
Complain about this comment
If an individual acheives or exceeds the goals that they agreed at the start of the year, then yes, if the profit has come in, distribute the bonus.
The issue is, should board level staff get a bonus if they fail to acheive or exceed goals?
You see, their goals always include profitability, cost control, risk, stock price etc.
When Brown et-al "bailed out" certain banks, they were in a position to impose rules like this, where they would be able to decide on rewards for directors (or even if they should stay) but did they do that?
No, they neither reviewed and amended senior appointments nor did they impose a bonus review process.
Many people have worked very hard all year and done a first rate job, in many cases the bonus has genuinely been earned after much personal sacrifice and devotion to duty, I see no reason why these people should not get their bonus if the company has been profitable.
Complain about this comment
Can we give this a rest please.
If not can we discuss why the BBC give £6m pa of tax payers money to J Ross
or why the BBC gives a £50 million contract to Ant and Dec (who I hear you shout!)
Now those really are matters of national concern
Complain about this comment
Cammeron is right
Woolsworth's staff left with nothing, some 30,000 of them,
Any kind of "bonus" to Bankers at this time when our taxes kept them afloat is anathama to the British Public
Bankers and their Employers should all breathe a breath of relief in that they are still employed at all. Also, there is a "glut" of Bankers from Wall Street to Frankfurt so no fear of anyone jumping ship if they are not paid a bonus.
Bankers are still in total denial as to to the scale of devastation theire actions and irisponsible actions at that, have caused millions of us
Complain about this comment
Huge wages could only ever be justified by 'Tournament Theory'. It meant that junior employees would be inspired to work hard in the hope that one day they would be at the top of the business earning mega bucks.
The only basis on which to pay an individual more than £300k per annum is if they could predict the future - which humans can not.
Even the most creative individuals cannot repeat unique creativity again and again. As an example, could Time Berners-Lee now invent something as big as but different from the internet?
None of these bankers, or anyone else earning large sums is really worth it. Running a business, no matter how large is just not that complicated. They could easily be replaced by the next guy down. If not, where is the science to prove their genius?
If they were truly unique surely their methods should be studied, written down and taught. If you put these guys in a lab you would find that they were not the brighest people. They would have IQ's in the 130-140 coupled with a risk taking personality.
If you have ever read a business biography around page 50 of 500 there is an event of the most unbelievable dumb luck you ever saw. Like cheating an old granny out of her shares.
So no, bonuses simply do not work. They never have. These businesses have been rewarding their employees for the luck of circumstance - even the modestly paid.
In the eighties there was a revolution in Quality Control that the west learned from Japan. Which incidentally they were taught by Demming the American mathematician. It seems that we need a similar period of reason within businesses. Reason and facts.
The presumption has been that financial alchemy was real - it was not, nor will it be.
Complain about this comment
I don't buy this theory that you won't attract able people if you don't pay huge bonuses. I notice that the government only seems to be worried about this in relation to bankers. There are some secondary schools without a single qualified Maths teacher, but no move to pay huge bonuses there, I note. The government is running true to form - if the public shows signs of becoming angry - fob them off with an enquiry, appoint a judge who follows the party line and, by the time he's reported, the anger will have died down. It's what happened with the David Kelly affair and it is now all fairly predictable. Oh - and by the way, if one of your policies has a bad name, change the name and rebrand it. Too many people translated 'quantitative easing' as 'printing money' so obviously some rebranding had to take place and they've come up with the much more palatable name of 'asset purchase scheme'. It makes printing money sound like a really good thing!!
Complain about this comment
People who've hit their targets *should* get any bonus they're entitled to - it means at some part of the banks have been a success.
Those at the top however, who've overseen the whole cock-up, shouldn't get a bean.
As for defecting to rivals, that's going to happen now anyway - the government has a mandate now to interfere in the banking system, and just as business fled New York for London to avoid regulation, so shall some other city set itself up as a banking centre and take the business that currently exists in London.
Then we'll all get to go through this again in another 20 years time.
Complain about this comment
I'm ashamed of Brown's weak approach.
Simple - 'bust' institutions relying on taxpayer bail-outs get zero bonus. They should be pleased they have a job.
Emergency legislation - 110% tax on any bonus over 15% base salary.
Otherwise - call in the the receiver. This only needs to happen to one instituion and they rest will quickly realize the game is up.
Complain about this comment
There shouldn't be a problem paying market-proofed bonuses for genuinely good performances that enhance a company's realised (in cash terms) profits.
I'm no banking expert, but it seems to be that if a bank branch worker sells a mortgage it could be many years before you know if that mortgage actually makes money for the bank (it might turn sub-prime in year ten during a property market crash). So how do you justify paying a bonus in year one on a financial product that has a life cycle of , say, 25 years?
If you sell cocolate bars in a corner shop it's pretty easy to measure whether or not your staff genuinely deserve a bonus at the end of the week.
Isn't that the rub - that banking products just don't lend themselves to sales based bonus systems?
Complain about this comment
If they think they can do better elsewhere, let them look. The threat rings more hollow with every passing month.
Many workers enjoy a performance-related pay component. It is often just a few percent of their basic salary however, and somewhat more for salespeople on commission, but nothing like the multiples of salary to which bankers appear contractually entitled whether they make a profit, a loss, or end up under state ownership.
Unless the practice is ended now, public support for the next emergency cash injection might prove even more elusive. Indeed, the award of a bonus this year might even run the unacceptable risk of customers voting with their feet.
Complain about this comment
Every time the BBC mentions this issue it fails to make a distinction between banks it owns and banks it doesn't.
Is this deliberate?
Complain about this comment
You seem in those last paragraphs to have answered you question of a few days ago.
Bankers, like anything/anyone else are a case of supply and demand, with nobody crying out for bankers at the moment the the lack of a bonus at any one bank will hardly see a mass exodus to comptetiers. As for the counter staff I see no difference between them and counter girls at Woolworths (apart from the lack of piercings) so they can whistle for it and be happy with the no doubt subsidisied mortgages they have.
For one I can't wait till tomorrow for the commons select committee and Sir Fred et al...should be class viewing
Complain about this comment
"The end is nigh" writes Robert Peston about bank bonuses.
A dead duck issue after this economic debacle if ever there was one. It won't be bonuses these bankers will be getting but P45's.
The real issue today (surprised Robert Peston hasn't mentioned it) is the news that THE ANGLO-SAXON MODEL HAS FAILED says Professor Roubini. "Self-regulation meant no regulation" says the Professor in the Financial Times today.
The end is not nigh for this economic model of capitalism it has already been declared stone dead. This is a much more weighty issue than the avariciousness of a few, about to be redundant bankers.
Those bankers who are left will be put on civil service pay grades. No bonuses there!
Going on about bankers bonuses is like beating a corpse with a stick.
RIP
The Anglo Saxon model of capitalism
Known as Big Bang
Born to Margaret Thatcher
27 October 1986
Declared dead by Prof. Roubini
9 February 2009
Complain about this comment
I think that's the key point. Some people are just living on a different planet. If your company goes bust you don't get a bonus. That's life and its called capitalism. No special cases. If my employer - a huge global organisation - goes bust, I doubt very much if I'll get much more than a carrier bag to take my things home let alone a shiny new rubbish bin.
Complain about this comment
#204 from previous posting
I couldn't agree with you more RE:
"brown says"we are leading the world in sweeping away the bank bonus culture"
This statement takes the cake even for GB. This man has left me shaking my head more than once in recent months with comments such as:
"Britain is better placed..." etc., etc.
I can't help but ask myself does GB genuinely believe these rubbish comments he continues throw out there or does he just think the British public are the biggest fools on the planet!!
It`s nice to know that once more GB is "leading the world" even if it is in his own mind.
Complain about this comment
For God's sake can we move on from this piffling game of playground politics.
We all know that any one of about 1 million people in this country could make it as a so called top banker (If they could but get their hands on a City passport a.k.a. Oxbridge degree...) and yes they could get an Oxbridge degree too if they had been gifted the same opportunities as those afforded to most of the Ruperts in the city.
This is all about class jealousy....and I don't mean the jealousy of the working man....I mean the jealousy of the Treasury officials who still haven't got over the fact that their university chums (yes those two universities again) who went into the City can afford nice houses and private school fees while they can't.
Has there ever been a better example of fiddling while Rome burns than watching one set of overprivileged twits from Whitehall bitching about that other breeding ground for the privileged, which is the City?
Labour has let vested interests in the City and in the civil service walk all over them. They are beneath contempt.
As a strong anti-socialist it pains me to say that we really could do with bringing back some of the old lefties to sort this London lot out.....Prescott? Scargill? Benn?
Complain about this comment
"why should the tens of thousands of employees be penalised.........."
simple without taxpayers aid they would not even have a job never mind a bonus......they should just be pleased they were not woolworth employees!
Complain about this comment
oh ohhhhh
Brown is going to box himself into a corner if he doesn't watch. If he hasn't the bottle just to call the bankers bluff on bonuses (and we aint seen anything to date which would suggest he was anything more than p*ss and wind) then he has to make a stand to save face. *
Either he has to come up with a lightning windfall tax (can he do that?) or maybe he has to nationalise the banks that he has a controlling interest in, and at the same time give Barclays 10 days to decide if they are going to need taxpayers money in the next 12 months. If they do, he has got some leverage over them as well.
If he nationalises the banks, then I'm off.
They have to dig themselves out of this mess as far as I am concerned.
If I was him, I would tell them I am taking most of my (taxpayers) money back if there is any monkey business, and they can whistle for their bonuses with the loose change they have left.
Time for hardball I reckon.
* a 12 month inquiry by a banking insider has been universally met with hoots of laughter, even by a meek BBC. That's a start for some serious dissent.
Complain about this comment
I'm sorry but it is complete nonsense of Varley to say it would be wrong for him to deprive mortgage advisers and branch staff of a few thousand pounds if they hit their targets.
These people may be front line and acting under orders from above but as has been proven time and time again in war courts around the world - just being a camp guard is no excuse!!
Complain about this comment
Very interesting, it is also not my fault that my few shares in LloydsTSB are not earning me a dividend.
It is not reasonable for people to get a bonus in a business that is being propped up by the taxpayer or anyone else for that matter.
No there are not a lot of jobs out there so lets skip that bit about real talent running off elsewhere.
Last year whilst the country was experiencing the worst floods ever the enviornment dept paid bonuses, now that was also appalling as that was our money too.
Whist MPs are busy moralising they could explain why we should pay such huge expenses that we are not allowed to receive receipts for, or have knowledge of.
Complain about this comment
The manager of your former local Woolies branch probably did a good job too. If he is lucky enough to have found himself another job he will probably be paying taxes to keep the banks at least nominally afloat.
Let the wonder kids go off to find themselves some other wits demanding job. In my day tic tac man at the local race course was a demanding job and very well paid. That would be the sort of thing although I suppose that is all done with cell 'phones these days. The gentlemen who unjustly get referred to by the media as "bankers"are skilled in obfuscation and perhaps drafting cell 'phone pricing literature might provide a few openings.
Complain about this comment
Dear Robert
I'm sure I speak for all of us when I ask if you could please write a few more reports about the issue of bonuses at Barclays et al
Our desire for the continued repackaging of this story is insatiable, as you know
We don't care about anything else
Even if my house were about to burn to the ground in an approaching bush fire I would stay right here and read your latest views on British Bankers Bonuses
Who cares that 600,000 people lost their jobs in the US in January! that the EU is on the verge of breaking up in turmoil! that several small countries are about to go to the wall and have to call in the IMF! that we are now manufacturing less stuff than we were 15 years ago!
NO DON'T MENTION ANY OF THAT! JUST TELL ME MORE ABOUT BARCLAYS BONUSES
PLEASE
Perhaps tomorrow you could discuss Barclay's bonuses from the perspective of great historical figures: would Napoleon have been in favour and how would he balance it against his view of Britain as a nature of shopkeepers? how about the Emperior Claudius on the eve of his successful invasion of this island in AD43? and Queen Boudica and her tax rebels in AD 60? King Harold and William the Conqueror on opposite sides of the issue? Churchill?
I can't wait
Complain about this comment
I can understand those at the top of any business wanting to look after their staff. What these big boy bankers need to realise though, is that at the rate they are losing active customers ie savers deserting, mass job losses, repossessions, business closures etc., they will be lucky to retain their staff members, let alone pay out a bonus!
My son is in the Construction Industry (working on a new school) and upon opening his pay slip last week, found a note inside saying that he had to take a five pound a day wage cut due to the current financial crisis. Naturally, he has to accept this unilateral decision - he needs his job, so continues to graft hard while hoping for kinder weather ahead.
I am sorry if front line banking staff feel aggrieved at the prospect of not receiving a bonus. I am also sorry that my son feels aggrieved at his pay cut. I will say the same to the banking staff as I said to my son ie Pull yer horns in and knuckle down. At least you still have a job, be thankful for it.
Complain about this comment
accountability for the current mess should be saught before we hand over bonuses to anyone.
we should be looking to get bonuses back from those that have been paid in the last few years too, HOW DARE THEY grab what they can and leave the tax payer to fix this whole sorry mess?
once the city fat cats have been dealt with the regulators/auditors want put through the mill; any corruption/negligence exposed wants prosecuted to the full extent of the law...
we're gonna be paying this mess for years, gordon and his lot will be out at the next election, the people in the city should pay too
Complain about this comment
Robert,
The case is well made on the political need for bankers not to be seen to get inflated remuneration. When I read the FSA's " Financial Risk Outlook" today remuneration was not the issue they thought was well proven in terms of why we are where we are now. It could have turbo charged the snowball but thats about it. The snowball was already rolling.
Lets talk about the monumental failure of regulation of these activities. Banks are licensed for a reason! Armies of bureaucrats and risk managers and ( yes) politicians who bowed to industry qualms about not having too many rules. Armies of Treasury folk creaming in the tax revenues funds pushing for ever higher returns on equity.
I dont agree with Jeff Randall that Joe Bloggs also should take the blame for buying that house he didnt need, nor could afford. He didnt have the nouse or facts to know what disaster was gathering. That was for others better informed than him who were there to avoid the shock.
Which is it going to be of the hedged options the FSA have pointed at for the future : Option 1 - mild recession with modest recovery ; Option 2 - deflationary pain and a long turn-around ; Option 3 - stagflation and a very rough ride.
Inflation is starting to grip food prices, so I have read today. Currency devaluation has bitten into imported ingredients. Can we be safe with energy costs when controlled by vitual monopolies. Oh, I forgot - dont worry - its a regulated market. That's ok then!
Complain about this comment
Why haven't they been fired yet?
Complain about this comment
"John Varley, Barclays' chief executive, told me it was right and proper that he shouldn't receive a mega-bonus - but that surely it would be wrong for him to deprive mortgage advisers and branch staff of a few thousand pounds if they hit their targets.
His peers too have said to me that what went wrong at banks like Royal Bank of Scotland, HBOS and Northern Rock, wasn't the fault of tens of thousands of junior employees - so why should they be penalised?"
Penalised?????? they still have jobs thanks to joe public dont they?
Any businessman/woman who discussed their accounts with the bank manager and said "well we lost a few million but i decided to give them all a bonus for working hard" would be absolutely carpeted by the so called business managers.
If RBS actually pay a bonus out with our rescue funding it will be spitting in the face of all of us.
We have been lead to believe that the state funding was to save the banks not the bonuses.
Mr Brown You represent the majority shareholder US, never mind all this arms length rubish, sort it out!
I for one will at least give you some respect if you do.
Complain about this comment
Before the pontificating knee-jerk reactionaries [including those that shout] get up a full head of steam it is about time some semblence of reality is applied .
I've read these blogs for some time now and am dimayed by poor reporting and inaccurate'facts' that are being related to the great British public and picked up by the factually challenged and their bigotted responses.
Hundreds of thousands of people work for banks in this country and the vast majority are on low basic, a performance related pay element and some sort of capped profit share.
No profits this year means that all will be taking at least a 10% cut in salary, bonuses are a dream some of them can only fantasise about and performance realted pay is likely not to be forthcoming.
Lets get something straight... performance related pay is not a bonus its what you work to achieve. A bonus is what you get over and above all that lot.
But what do we have? People on these blogs , ignorant of the facts misrepresenting legitimate elements of an employees pay package with a bonus ripped of by a handful of investment bankers and incompetent directors.
You try telling a normal bank employee on 12.5k per annum basic that they are not going to recieve what they have earned.
Compare them to workers on a piece rate. If you make 10 you get a £1 if you make 20 you get £1.10 . If you meet your target you get the agreed payment.
And don't argue that they should be lucky they are in a job. If these hard working low and middle level employees hadn't put such hard work in there would be no mitigation of the effect of poor decisionmaking and greed further up the tree and this financial crisis would be so much worse.
Let their banks fail? then you wopuld add between 2-3m to the ranks of the unemployed and condem this country to a 10 year depression.
Try to remember once you have paid your taxes its no longer your i.e. taxpayer's money, but the government's money. You don't own a share of the banks the government does, all you do is elect the government and given our democracy's rules that mean that about 20% of the population got what they wanted... not quite the kind of pareto to inspire confidence.
If you want a real pop at the people who had the power to keep us out of this situation have a go at the policians running the world's governments and demand back their performance related pay not that of vulnerable working men on women struggling to keep a roof over their head.
Complain about this comment
In truth even companies like Barclays should not be paying bonus's since the tax payer owns them thru the cheap loan schemes that the BOE offered them at the expense of the interest rates and tax payer.
This issue of the banks will haunt the government for decades. They should have just let the Banks fail safe guarding all savers funds.
Their used to be a saying that Bankers didnt do banking as a career, people only went into banking with the aim of making it big and retiring early.
Complain about this comment
so what your saying mr peston is that the average joe bloggs who works his dam socks off and consistently looks after the customers he speaks to,even when they complain about level of service recieved.
to me this is not just an attack on senior bankers bonuses,who quite rightly deserve them if they are succesfull.
its an attack on anyone who works for a bank,whether its a senior banker,branch manager,personal banker,collections staff or general contact centre staff.
take my job as part of debt collections staff at a unnamed bank.
if i work hard to get a significant amount of customers accounts back into order or at very least leave them satisfied with my service,what right has the goverment or anyone here at the bbc got to question whether i should get a bonus.
like ive said on a previous post,the goverment and now im also saying THE BBC need to get there own house in order and introduce pay restraint in their own backyard before they have the right to question any bonus given to your average.
Complain about this comment
I think you have rather neatly written an article which sums up about 1000 posts spread across two of your blogs on Friday last week.
There is no case for bonuses for bank staff and anyone who works in a bank at any level which has received government money is lucky to simply have a job.
I think a lot of us will be encouraged at a subsequent article of yours that sums up what we all said following what were 'fishing' blogs on Friday.
Now what's the next subject you need help with public opinion on RP - how about what should be the future STRATEGY for this country?
Bearing in mind if there was a war now we would struggle to feed ourselves?
Complain about this comment
Peter Preston
Lay off the bankers and stop doing the politicians dirty work for them! Looks like with every post you are contradicting yourself. Perhaps too much adulation has gone to your head!
Governments will always find scapegoats for its own failures to regulate and lead through honesty.
It used to be the public service unions, then the miners, then social workers and teachers, lately the doctors and now the bankers.
Everybody and every profession but the politicians are lambasted at one time or another by the politicians often aided and abetted by journalists after a cheap story.
Don't forget that the vast majority of bankers are young people working excessively long hours! Its not their fault that the bonus culture is written into their contracts. Its all right for you and David Cameron to say that these people are lucky to have a job at all. Well I have good news for you two. If it wasn't for the bailout of the banks more of the hundreds of thousands of others in the wider economy would have also gone under. We would have entered a depression worse than the one in 1930s.
Unfortunately a handful of bankers at the very top of the ladder have behaved despicably and it is right that banking practices are looked into and better regulated. It is right that these board room members and top executives be denied their bonuses. What really annoys me is the nation's hysteria led by you, Mr Preston, that is tarnishing everybody with the same brush.
If anybody who is going to get us out of this mess it is these young hard working bankers and not politicians and journalists.
My son works 10-12 hours sometimes 7 days a week doing honest trades that generate income not only for the bank but also for pension funds and savers. He is on a salary which is lower than his contemporaries in medicine, law and accountancy. If he gets a bonus its because he has earned it. And he pays his taxes!
The national hysteria over success is quite demeaning and a break on young brilliant minds to take this country forward!
Complain about this comment
What is stopping the Government impossing an unearned bonus tax - 98%. The onus would be on the recipient to prove that they earned the bonus by actual proportianate work? Oh I forgot, politics doesn't mix with common sense does it?
Complain about this comment
Absolutely no bonus for any employees of Royal Bank of Scotland, HBOS or Northern Rock. Employees of all these banks have had their bonus. They still have a job.
As far as Barclays et al is concerned Gordon (the bankers lackey) Brown should make it clear that if they go ahead with bonus payments then the government will withdraw all depositor guarantees.
Worried someone might sue for breach of contract? Only the reckless would contemplate having their name and address appear in the papers in such a context.
At the end of the day though I despair at a Prime minister so pathetic, weak and out of touch with public opinion
Complain about this comment
This site is certainly running red hot.
None of us who whinge on here have anything against ordinary branch staff making up their wages with smallish bonuses.
The problem has always been the City wide-boys and their 5 million quid top-ups.
There is no doubt that this greed phenomenon has caused the world financial collapse.
That is a pretty good reason to ban it.
What about the "revenue generators" (the special ones) who will flee if they dont get millions a year?
Well, that is why a worldwide limit is necessary, or we will be in the same mess in 20 years time, or perhaps worse.
If there is a worldwide limit, what is the point of fleeing?
Why dont the worlds' best surgeons flee if they are not paid in millions?
It's because greed is not the main motivator in medicine.
All govs must get together and sort it out.
Or the greed machine will destroy our kids and grand-kids as well.
Complain about this comment
Poor old Brown, standing on the sidelines, wringing your hands. Sorry, Brownie, you have been the victim of another Banker's Bamboozle.
So - they told you they were bust - and, as banks, unlike any normal UK business - they could not POSSIBLY be allowed to fail!
They therefore needed immediate access to the taxpayers' purse to survive.
So, sucker, you bailed them out - with our money.
What sort of conditions did you impose?
Disgracefully, not enough.
Negotiator? Don't make me laugh......... Imprudent, inept, etc - get the picture, Brownie?
So, now that they're of the hook, arrogant bankers such as RBS, are behaving as if nothing has changed - Hooray! - bonuses all round, lads - drinks are on the taxpayer!
Complain about this comment
The average branch cashier earns about £16k a year and if they have hit their targets may take home another £1k in bonus payments. This is a tough job - on the go with a queue all day with no respite and little thanks or worse if referral targets aren't met.
This same lucky individual will have lost 80% of any previous bonuses (i.e. their modest life savings) due to the recent decline in share values. They are hurt confused and bewildered - they are mostly proud hard working citizens with families too dignified to speak out. They have been ravaged by the downturn - far more so than most. Would you like to swap?
Please please please - differentiate in your reporting between executive bonuses and those of junior staff - they are absolutely not the same thing.
Complain about this comment
Robert,
Varley has a good point. The public do not differentiate from global market bank employees and the cashier/branch employee - when it comes to bonus payments.
I know that they may noy have jobs if it was not for the bail out - but simply if incentove schemes are not honoured, these workers will move to companies where it will be.
So in time, the bail out banks will have less skilled, less driven workers - and maybe the bank would slowly fail anyway.
Not their fault, so don't penelise them!
Complain about this comment
PURGE THE PARASITES CLEAN OUT THE
BOARD ROOMS AND SENIOR MANAGEMENT.
CAP LISTED PLC PAY AT 75K max.
Complain about this comment
It is totally wrong for the banks to pay any bonuses while there are hundreds of savers who have lost their investments in the banks. I have personally lost several hundred pounds as a direct result of the government nationalisation of Bradford and Bingley and have no hope of recovery of my savings. Bonuses should only be paid when a company makes a profit not a £20bn loss!
Complain about this comment
I believe therein lies a fundamental issue with bankers. Does the individuals so called perfomance be taken in isolation of the groups? Or should the bonus pot be looked at as a collective whole.
While at a certain major bank a system was instituted whereby it was possible to give the entire bonus pot to one person if it was agreed that that person added most of the material value of the department. In many ways it was quite insiduous and created an "island" mentality of individualism and effectively destroyed teamwork.
Each individual was rather arbitrarily plotted on an axis of "behaviors" vs "added value". The ultimate aim being to end up in the upper right hand quadrant.
Of course even though the best efforts were made to make the system scientific and independent it was of course frought with major issues of fairness and created considerable staff unhappiness. The system carries on in that bank as far as I know. The reward structure was an ultimate expression of individualism.
There are issues
1. Bankers tend to believe their own PR almost blinkeredly, however they don't appear to want to take the downside with the upside. Make no mistake Lloyds hasn't done great. It won't be 43% bailed by the government if it was. How on earth directors and execs believe that they still are worth their money? I know they have guaranteed bonuses based on legal agreements however the fact that these agreements were made in the first place is rather questionable regarding the management. Also just smaller bonuses be paid in this environment? David Cameron is absolutely right, they should be grateful for being in a job, however the most insiduous aspect of the culture is that they think it is their RIGHT to receive such payments.
2. Bankers don't necessarily make good decisions, they just make confident ones. For instance a decision has been taken by a major bank to outsource a large part of its accounting and legals to India. This bank confidently reported to the markets that their variable costs have fallen considerably. The question is, over time will this strategy prove correct or will it come back to bite them in the proverbial? If these decisions prove a disaster for shareholder value should these senior bankers for which a risk premium has been paid to make these decisions be penalised? Personally I think so.
3. Bankers are NOT being treated badly. These guys are already on very large salaries. Moreover you will find that alot of their transport, "lunches" and even dinners are paid for by company. You will find them in the IVY, the Wolsey and Claridges. They have becomed accustomed to a lifestyle and they expect us to fund it. A persons worth is how much the market has been convinced to pay, sadly it currently isn't based on long term value. Bank has appeared to have lost the culture for a reasonable days work for a reasonable days pay, they have taken astronomical risks and has told us that "the risks weren't spelt out to us" - I sorry, but isn't that why we are paying them their massive salaries????
The suggestion has been made to reward them with shares not cash. Well I think quite frankly they have been rewarded enough already. They need to show restraint and cicumspection. At worst I think there need some much longer minimal option exercise dates .
Complain about this comment
" John Varley, Barclays' chief executive, told me it was right and proper that he shouldn't receive a mega-bonus - but that surely it would be wrong for him to deprive mortgage advisers and branch staff of a few thousand pounds if they hit their targets.
His peers too have said to me that what went wrong at banks like Royal Bank of Scotland, HBOS and Northern Rock, wasn't the fault of tens of thousands of junior employees - so why should they be penalised? "
Pardon?
A few thousand pounds, as you put it Mr Varley, may not mean much to you or many of your ilk, but it is a fortune to some of todays workers and many others struggling through the economic mess you and your chums have put us all in.
Tell me Mr Varley...do you lose any sleep over the savers receiving next to nothing on their savings - some of whom are pensioners who cannot dream of getting anywhere near a few hundred quid, let alone a few thousand at the end of the financial year?
I can understand why so many of you bright boys got us into this mess. You are so far removed from everyday life and ordinary people that you really have not got a clue. In addition, you clearly do not think through what you are saying and how your choice of words will be interpreted by others. Well, I suggest you keep your ear to the ground and start learning what the masses are thinking about viz a viz your Industry. For a so called captain of industry, you really do not have a clue do you? WHO put your staff in this position?
YOU DID, so do not try to justify your words by appearing to make a somewhat contrite comment. Your deposit account holders are covered by a tax payer guarantee (at the moment) That should be withdrawn forthwith if you continue with this bonus culture. The people of this country are suffering, but you can't feel or imagine their pain. If my bank pays out bonuses, I will be shutting my accounts and moving them elsewhere, as I consider it an obscene gesture and totally inappropriate in these hard times and I feel that way even though I am comfortable - no mortgages or credit cards or indebtedness. You and other so called top notch bankers owe your employees and this country big time. May I suggest you all start by offering a formal and unreserved apology.
Complain about this comment
Most people at Banks get a bonus but no final salary pension. The pensions would be worth a lot more.
Bonuses should be used to reward hard work. People I know who work in banks often work long days, unpaid overtime, working into the evenings or weekends. Absenteeism is low. Most put a lot of effort into their work. The bonuses help focus people's attention. A bonus of say 1 or 2 % annual salary wouldn't create enough incentive.. The bonus has to be a meaningful amount to motivate the hard work. 10 to 20% of annual salary for that hard work seems fair. More than that is too expensive for the employer and puts too much emphasis on the often subjective view of a manager. In a lot of cases its cheaper to pay bonuses of 10-20% for the extra work than to pay people for their overtime.
In some (but not all) parts of the public sector where bonuses are rare there are much higher rates of absenteeism and many people don't work a minute longer than the minimum they can get away with without expecting paid overtime and/ or flexi-time. There is little incentive to work your socks off. And we the taxpayer and our grandchildren will be paying final salary pensions to these people.
Clearly its the public sector reward mechanisms that are wrong, not the banks'.
Complain about this comment
I agree totally that "Fat Cat" bosses should not receive such huge bonuses, but don't forget that there are many people who work for the banking industry that do deserve extra for all of their hardwork and efforts. I am currently on maternity leave and I have worked for one of the semi nationlised banks for many years. I have never mis-sold or taken any risks. I have always gone out of my way for customers and I am totally sympathetic with anyone facing financial difficulty, but I also have to follow certain guidelines set out to me, which I have done and I am now more dependent on receiving a bonus, especially with the current market, as my salary is less then 14,000 a year!
If the case is that we shouldn't receive any bonus then I also call for Gordon Brown and all members of the government to not receive any taxpayers money for his many houses and holidays which we all pay for ever year!
Complain about this comment
Robert,
Your article assumes that bankers would only go to other banks... There are plenty of other careers for sharp, numerate, IT-savvy people who work well under pressure. But if they go, who will run the banks?
One rather good (negative) correlation is between graduate studies admissions and Wall Street job numbers: people leaving banks go into academia, and vice versa, as the market cycles...
Complain about this comment
Just an idea.
Let's have the serious fraud squad in the banks now, right now. Furthermore, in order to offer protection to us all, the SFS should remain permanently at those institutions to ensure that everything is above board. If the SFS cannot make head nor tails of any future complex financial instruments, then they should be outlawed.
Why is it that we are regulated over most aspects of our lives - we have to follow the rule book, or else - yet the regulators do not know how to regulate the banks? If they are too big to fall, then let them crash. No more highway robbery by bankers.
These CDO's and other suchlike instruments were, I assume, a form of insurance YET they were not regulated by the Insurance Industry - they were not regulated at all. Sheer greed by the most privileged in our society has brought the wolves to peoples' doors. Unforgiveable.
Complain about this comment
Robert,
Talking about obscene amounts of money, the BBC could do with making a few cutbacks. Johnathon Ross springs to mind. Perhaps then, you could employ more moderators for your popular blog, as I have not read one comment yet and that is two and a half hours after you posted this blog.
Complain about this comment
There's a very simple solution. You can't challenge existing contracts legally but HMRC can set any rules they like, so just tax the bonuses at 95%.
Complain about this comment
I see Peston is still on message
Labour party Mandleson plan no 72 to deflect blame
Lets blame the bonus culture
Who can we get onside, the BBC, Robert Peston, the Murdoch media etc etc
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
As somebody who works for a bank that has received taxpayer support I can understand the current media campaign about bank bonuses. However, I also want to state that there are lots of people who work in banks that arent paid large salaries, or who receive large bonuses. The majority of people who work for banks are paid average salaries. These people arent Executives or fat cats, they are ordinary everyday people trying to do the best job they can for their customers. The actions of a few have caused this mess. So please, can the media and politicians kicking this issue around like a football remember that not everyone who works for a bank is a fat cat banker - indeed, not everyone who works for a bank is actually in banking. My own division of the bank has had its most successful year for a long time producing a great result in a difficult year. We may not get rewarded for it in the end, I guess thats just the way it is. PS - I work, I pay tax, I guess I own the bank I work for. Just like you !
Complain about this comment
All this pleading merely goes to show what a pathetic little boys' club this all is.
Through a tantrum boys. It won't make any difference. No Bonuses. N. O. spells no.
Maybe they should properly participate in the Milk Rounds?
And, since there will be such a high level of unemployment amongst graduates, have these banks considered using any of these new proposed internships as a means or cutting the cost of resources. Sorry folks, but these bankers do not see any of us a people, just plain old resources.
Naturally, these new potential employees will be working for new pay and conditions that reflect good ethical attributes and require decent behaviour of the employee, whilst reflecting the new approach to bonus payments (no stupendous bonus levels for any one).
The vast amounts of future profits will obviously be spent on raising the salaries of all employees (so no need for bonuses), paying the shareholders, and walking in the footsteps of the lead from folks such as Andrew Carnegie. Free education for all on earth, the end of all hunger, malaria kicked into touch, ....
Was that a flying saucer I just saw pass by......?
Complain about this comment
Brilliant traders and assorted rocket scientists with their pockets stuffed with massive financial incentives got most Western countries where they are today.
Ordinary bank workers may be less guilty than their millionaire colleagues of those cleverly disguised and complex ruinous tricks. But the absence of bonuses for a few years will motivate bank workers to keep careful checks and interests on these colleagues and managers lest they try again to enrich their own pockets, grand villas, fast cars and tax haven bank accounts at the expense of everyone else.
If some people need bonuses to do a day's work, perhaps nobody should do a day's work without bonuses ... Let there be no electricity, no water on tap, let rubbish go uncollected, no taxis/planes/trains, no food, let lifts goes unserviced, let pest and disease multiple ...
Complain about this comment
Yes, but these wonderful people who were hitting their targets were in fact selling products (ie loans) which people could not afford and which fed house price inflation.
They relied on credit rating agencies which obviously didn't do their job. Simple searches about the number of credit cards, loans etc and a look at pay slips, income tax forms would have revealed their income. But being too inquisitive would have affected their bonuses. It isn't just the big chiefs who were at fault.
Working as I do in the voluntary debt management sector, I wonder who were these idiots who handed out the loans? I don't mean high flying executives either, I mean the person who sat across a desk from a part time nail technician and loaned her the money to buy a brand new car.
Complain about this comment
I do not support bonus payments to executives but do not feel that it can be right to lump the less well paid employees (say on 20k = a 3k) bonus with the senior staff and feel that the real hardship losing this part of their remuneration represents would be an act of vengeance against those who were never in a position to influence the decision making process at the banks. We should perhaps put a cash limit on bonuses say 10k. How can those of us who are paid as well as Mr Peston or whose wealth is as large as Mr Cameron's sit in such judgement on those much less well paid than themselves because part of their wages is termed bonus. A good step would of course be for the fat cats to suggest such a limit to protect their less valued colleagues but I suspect they are to valuable as a means of leverage to justify top level bonus payment.
Complain about this comment
In a way, this is a bit of a sideshow (we really ought to be concentrating on fending off the depression we're falling into). But obviously this issue resonates with the electorate and the Government has to decide what to do about it.
First and foremost it's obvious that these people should NOT be receiving bonuses. If Banks (or similar) have got contractual obligations to pay bonuses to certain staff, then the Government should immediately legislate to make any such contract illegal. And make any other contractual nonsense (like golden handshakes) illegal too. Not just for banks but for all management.
Secondly though, we need to ask
- whether there has been something fundamentally wrong with a system that has allowed banks and other financial institutions to make such huge profits that they could afford to pay these bonuses.
- whether bonuses as a major part of remuneration are a good idea anyway.
I think the fact that banks have been so profitable is a sign of a failed market. There is obviously a problem with lack of competitton here. But mostly the problem is that the profits were essentially fraudulent - the banks found ways round regulation, and for a bank to do that is pretty much indistinuishable from forging banknotes.
Regarding the overall question of bonuses, and more generally performance related pay, I've long had severe reservations about this. In almost every case I've seen, the measurements against which bonuses were set have been ill-thought out, leaving managers with a conflict of interest between what is in the long-term interests of their company and the short-term requirements of their bonus scheme. Add into this the ridiculous money made by senior management, such that two or three years work is enough to retire on and you have a recipe for short-termism-gone-mad.
We need to change the rules so this doesn't happen. Discourage bonus schemes by taxing them heavily (unless set up in a way that only long term success is rewarded).
Complain about this comment
I cant help but suspect that an underarm is being bowled to Flash and co' for them to smash for six.
I.E. Stir up bank bonus frenzy, Flash warns he is getting angry (don't make me angry, you won't like me when I am angry) - greedy bankers bank bow down in submission to the great leader - the mass' look on in adorement and wonder (may be he is respected after all no one would ever suspect a PR stunt of such proportioin not even from nuishLabour) as the great leader bounce's back in the polls yet again.
Either that or Flash an co' are about to be bowled out by a googly and collapse faster than England in the West Indies.
Im betting if these bonus' go through and Jackie Smith does not rectify her sleeping arrangements this godvernment will bring people onto the streets.
Complain about this comment
Perhaps we can roll this out across the whole spectrum of employment?
Garage proprietor: "Afteroon Mr Blog! yer motor's ready!"
Customer:" Where is it please?"
Garage man: " See that smouldering pile of junk in the corner of the ol'yard? Well that's yer two year old Bentley: we dropped the motah off the ramp in the middle of the service: the mechanic road testing it stuffed it into a dustcart; and when he got it back the apprentice was sittin' in it eating his lunch and set it afire with his reefer!"
"We've added the usual 1,000% markup on the ol' bill to cover the staff bonuses. Orlright?"
Yes: I can really see this system working rather well!
Complain about this comment
Robert. Most people working in the real world will tell you that irrespective as to how a particular division or department performs over a financial year, it is how the organisation as whole performs that determines wether or not bonuses are paid. Simple.
Complain about this comment
Cameron got is spot on.
At least they have jobs.
In fact, at least is not quite accurate. They have well paid jobs with final salary pensions, some of the last left in the private sector.
They have it very good.
Complain about this comment
OK, so some banker bonuses have a contractual basis.
What would be the legal status of these contracts if RBS - unlike every non-bank, like Woolworths - had been allowed to go bust?
So,are we saying, one soft landing for bankers, no safety net for the rest of us ( ie Woolworths )?
Complain about this comment
I'd like to suggest a new game. It's how to take advantage of bankers' undeserved bonuses because we won't get them back.
I imagine there are a fair number of ski chalets bought as 'treats' for all their hard work. Free holiday accommodation for us all (not that most of us can even afford the airfares). Go on, just walk in.
Mi casa es taxpayers' casa...
Love to see their faces... go on I dare somebody. It would make a great press article!
Complain about this comment
Point 1: I work as an estates cleaner for a salary of 14k. Myself and peers received between 1% and 4% bonuses which (I believe) was less than last year. Same should go for banks (all levels of staff). However, my company is still in business, and by all reports does a very good job, although financially it has been hit by the downturn.
Point 2: Surely bonuses are performance related. Therefore poor performance means poor bonus. Banks have effectively gone bust so I don't see why any bonuses should be awarded at all.
Complain about this comment
if you insist on pre-moderation then at least moderate....the delay has now become a joke i posted over 3 hours ago and it is still waiting....
Complain about this comment
The question of should senior bankers and the vast majority of people, working lower downm in the banking be paid a bonus is at this moment in time a contentious one.
Given the appalling crisis that now confronts the UK economy and baring in mind this was largely caused by the senior bankers whose reckless mismanagement of the the banks affairs left them insolvent and without government help they would have to declared bankrupt and wound up then any talk of paying a bonus to bak employees should be completely disregarded.
That might seem unfair to all those bank employees who worked hard all year long to achieve the unrealistic business goals and objectives that the banking dosses set them but unfortunately, bank employees are no different from the many tens of thousands of employees in other sectors of the economy who worked just as hard but didn't recieve a bonus payment and now find themselves unemployed through no fault of their own.
Regarding the nonsense spoken about the best talent going to the highest payer then I say let them go. The 'elite' in the Banking industry, the City and other leading institutions need to start looking a little more closely at themsleves and question their motives as to what is a fair reward for a days work. If any individual believes they should be paid more than £500,000 per annum then we need to ask are they a fit and proper person to run a large organisation where the vast majority of people who work there are paid a pittance by comparrison.
Complain about this comment
I am so sick of this debate, and listening to those who would try to make any sort of case for the indefensible.
Enough of this nonsense - I am really looking forward to the day when one or all of these wretched institutions fail irretrievably, along with Gordon Brown, the FSA and the BOE.
Frankly I would rather live in a cave than have to put up with any more of this. I just wish there was someone out there who could articulate the frustrations of the British public to this shower.
Even Jeff Randall this evening let Bob Diamond get away with sounding all is well and good with the 'universal banking model' and his pay package. The media are pathetic.
Everyone expects we will get some revenge at the select committee tomorrow. However I have no doubt there will be just a few pointed questions, some evasive answers, then that will be that. The bankers will fly off in their private jets afterwards, laughing all the way to the bank.
Complain about this comment
It's all very well for Brown to be "angry" about this but what on earth is he actually going to do?
Complain about this comment
How long does it take to moderate a comment? If the BBC are short of moderaters I'll happily do it ( for a fee of course ) if I can do it at home where I'm certain to be spending, in that time honoured political phrase, "more time with the family"
No Bonuses for Failure. About the only thing Flash has got right. Pity he has no means of implementing it without going nuclear.
Complain about this comment
If the majority of people were offered a large bonus, with the knowledge that in the near future unemployment was almost inevitable, to say that they would not want or accept the money is a a damn right false hood and lie.
Mr Brown and his entourage have once again used jealousy and personal greed as a diastraction to the real issues, they are using this as manipulation to distract us from their failings, as they did whilst leading us into this mess in the first place with the help and willingness of the Bush administration.
Our living standards will drop, this is inevitable, once this is accepted by us all, we can then concentrate on ensuring that we have energy and food needs to give us a comfortable standard of living, something that we seem to forget is not a given right in a vast proportion of the world. When I say `living standards`, this is debateable to me, I enjoy time to just be, time to spend with the family, to enjoy nature and to laugh with my friends, material items are not a rise is living standards, but an encumberance to our morality and happiness. We need to re-prioritise our wants and desires, I would be surprised to find the majority of people saying that plastic toys on the front of chidrens magazines is an enhancement, we need to re-address our happiness and what it takes to give this to us.
Complain about this comment
For those whom wish to see some more measured and less frenetic debate with some genuine insight and some touching posts too.
Go to paul masons Blog on the newsnight website.
You will not regret it.
Jericoa
Complain about this comment
For what it's worth, this is why all banking staff should not be paid a bonus.
John Varley at Barclays says that if a mortgage adviser hit his target, he should be paid a bonus.
I say no he or she shouldn't because banking staff should not be targeted with bonuses for hitting these type of sales targets; they only lead to mis-selling and questions about whether or not someone is sold the most suitable product.
Whether it is selling an ISA or opening a deposit account, pointing a customer towards the financial adviser if they have over £5,000 in their account or selling some sort of house insurance, these sales people or tellers are pressurised to make a sale, no matter that it may not be the right thing for the client.
So take your mortgage adviser. He doesn't get bonused for giving impartial mortgage information to a client because he can only sell a Barclays mortgage. If he informs a client that there is a better deal elsewhere that client walks off. That's good for the client but guess what: there's no sale for the adviser and therefore no bonus. So with a regional director hassling the bank manager and the bank manager hassling the mortgage adviser to up the productivity (and believe me this is rife in the industry), pressure sales come into play: clients get sold the wrong product and/or the wrong service.
In financial services, EVERYONE should be first, qualified to a higher standard and secondly EVERYONE should be independent being able to sell from the entire marketplace: tied advisers selling their own products and services should be stopped immediately.....and no one, no one should have their pay supplemented by the number of sales they make; we're not selling ice creams here but property which for most people is the biggest asset they will ever have.
Just for those who don't know, the FSA were going to do away with financial advisers in banks who pressure sold their own bank products but thay have now climbed down. Why? Because their own appointed panel of experts made up of former bank staff have their own interests at heart and have pressured evryone at the FSA to believe that this restricted selling practice is good for the masses. (For masses, read banks).
Whilst we're on the subject of bonuses, perhaps our MPs can look at their own pat structure as they are paid needless and excessive supplementary amounts to the core salary. Living expenses, travelling expenses and all other expenses are there to make up the salaries. It's like a 'use it or lose it' allowance and human nature being what it is, you'r enot going to lose it, are you?
Also if there is to be an independent 'non-independent' review into bankers pay, why can't we do the same for MPs. I mean if the bankers aren't allowed to review their own pay structure, why should MPs be allowed to.
If you ask the man in the street why we are in this mess, he will tell you it's the bankers but actually it's the bankers, the government, the regulators (the main perpetrator being the FSA) and the credit risk agencies.
All have been short termist and all are looking after their own self-interests; how can an MP vote with his conscience if his vote will help to bring down his party. In a peverse way he would be voting for his own redundancy. Again human nature being what it is..... How can the FSA continue to constantly bring in new people every three years; the new appointee is always going to make a change for changes sake because you're not going to get paid if you say most things are ok, all it needs is a small tweak here and there.
The chap in charge of the department at the FSA who lost his job because of the failure to regulate what was going on at Northern Rock was paid off in excess of £100,000 (message to moderator: this was made public knowledge so is not libellous!).
Why was this bonus/reward paid? After all, he was paid to regulate the banks. Was he a success? No that's why he had to resign. No success; no reward. The same for the bankers.
Don't get me wrong. Bonuses are a good thing if they are earned in the right way, for example streamlining business processes for greater efficiency and improved productivity in a RESPONSIBLE way.
I feel this message is getting lost in the government's efforts to play the blame game, i.e. blame everyone but yourself.
However accountability and responsibility work both ways for governments, the FSA and the banks.
Success through fair and ethical means=bonus.
Failure or success through unfair and unethical means=no bonus.
Ethics as far as these three bodies go is a county east of London.
Complain about this comment
Astonishing arrogance from "cityfinancier",
sadly all too typical of the bonus defence (see Sunday's post).
So displaced from reality in fact I am posting this again so people can get used to the whinging we hear time and time again from these people.
Such arrogance is to be expected from the city these days.
Politics of envy? Another cliche we hear bleated repeatedly. I think not. Politics of fair play i think is much more reasonable.
Has it occurred to cityfinancier that had the government not underwritten RBS, there would be no legal issue with regard to city bonuses promised months in advance, because there would be no funding left to support these outrageous payments.
As for "no cost to the tax payer"...where do these magical shares come from to pay RBS bonuses? Or is this still the pervasive attitude of the "something for nothing" culture of the city.
As for the rest of cityfinancier's splenic diatribe,
who on earth thinks that bankers are professionals? Most definitions of professional I refer to include "learned" and a person who "is a skilled practioner" (eg lawyer or doctor) none of which applies to the bankers.
100k sounds like a very good salary for anyone and is 25% more than a hospital doctor's salary at the height of his/her training. I don't believe bonuses are a normal part of this profession. Then again, doctors couldn't possibly be comparable to "banking professionals" could they?
Last but not least, I spend hours at night worrying about the possibility that we might lose these "high performing" "professionals" from UK soil if bonuses are not honored. What a sadness that would be. Frankly, I would be delighted if they would go and ruin another economy and leave us to repair the damage and misery they have reaped on us all.
City definitions for the uninitiated:
Remuneration: payment at taxpayers expense
Politics of envy: City term to justify theft from taxpayer
High performing: Low performing
Low performing: Country wrecking
Bonus: Any remaining money hidden away in financial institutions that rightfully belongs to "banking professionals"
Toxic debt: Taxpayer asset
Toxic bank: A great taxpayer investment
Bank: what is left over once the greedy taxpayer has pillaged toxic debt from the poor old city financiers
Banker: answers on a postcard please
Public sector worker: Slave for the "banking professional"
100k: pocket money for the children
Basic salary: spare change a "city professional" would spend on a night out, but moan about to justify bonus (for definition see above).
Insecurity of tenure: Another excuse for a bonus
Professional: Con merchant
Complain about this comment
Unintended and perverse consequences are inherent in ALL bonus schemes. I have had experience of four different schemes in the public sector.
Bonuses are also divisive and corrupt the relationship between employee and employer. Lets have a bonus scheme crunch!
Complain about this comment
Everyone (except cityfinancier of course) should sign up to John Prescott's petition. Gordon is so out of touch, it has taken JP to talk some sense into politics. 4000 signatures already.
http://www.ipetitions.com/petition/giveupthebonus/
Complain about this comment
And it's goodnight from him.
http://news.bbc.co.uk/2/hi/uk_news/politics/7880189.stm
Goodnight
Complain about this comment
How long can you sustain infamous "global imbalances"? What are the forces that sustain them? Isn't (although more: "wasn't") creative banking one of them?
Creative banking suspended for a while laws of termodynamics applied to global markets. Benefactors of this miracle where happy to pay a bonus for an achievement of this magnitude.
Shall we seek other forms of sustaining status quo? Shall status quo be sustained?
Complain about this comment
OK, they're looking for headhunters - let's start hunting some heads.
I still don't accept that any in banking, even cashiers, should get a bonus when there are those who have lost their jobs thanks to the local retail management's refusal to offer credit, even if guaranteed. They at least still have jobs, that's their bonus.
And the fact they don't appreciate this is enough to persuade me that they do not deserve another chance. They've had two and wasted them. To lose one chance may be an accident, to lose two looks like carelessness, and three strikes, you're out.
Complain about this comment
there isnt any case in this instance, If they had a bonus pot was it from us or did they have it saved? If from us then surely there is a legal case and if they had a pot stored then it should have come out to save them.
Also all this talk that the great gordo cant do anything...... thats pants as it is he surely plus other past premiers who gave the banks the anonymity to create this mess we are in. then surely if the lord giveth the lord gord can take it away and turn his reputation round with the stroke of a pen. legislate the banks not the market
Complain about this comment
Let the bonuses of the many be paid by those who have received big bonuses and kickbacks (politicians) over the last 10 years, and by those who have made good profits from banks' losses.
Is a legal contract that enslave a just contract? Neither Hitler nor Saddam broke any laws nor committed any crime under the law of Germany and Iraq in their time. Men will be judged in equal measure by what they have done and what they didn't do.
Complain about this comment
You know what they say re:
OTHER PEOPLES MONEY?
SPEND!SPEND! SPEND!
YOUVE GOT TO PICK A POCKET OR TWO.
WELL DONE GORDY!!
GO HAVE YOUR HISSY FIT?
Complain about this comment
I remember that Bernard Levin described chutzpah as the child who killed his parents and pleaded in mitigation that he was an orphan. But bankers threatening to leave companies that they have trashed if they are not paid bonuses? It takes chutzpah to new heights!
Complain about this comment
It is a huge disappointment, yet no surprise, that 'the voices' demand that no bonuses be paid to the staff of British Banks. It wasn't the British Banks that started the problems in the first place, we can thank our American cousins for that.
In the case of the much maligned RBS, the executives of the bank who over saw such deals as the consortium to buy ABN Amro have already left the Bank with their golden parachutes and the remainder of the employees have to live with the fall out.
Yet in reality the majority of staff (who have had no influence on this or any other disastrous financial global circumstance) have been working hard all year to a set of targets to ensure a return to the shareholders and deserve to be paid for it.
Make no mistake the government would not have "bailed out" the banks without the knowledge they are going to make a healthy return on their investment - because that is what it is. They have bought shares, not made loans, bought shares.
In the instance of the RBS the government originally bought preference shares demanding a return of 12%.
Given 12% as a cost of borrowing and the BoE base rate falling the government said "pass on the fall in rate to your customers!" Difficult to do when they are demanding a 12% return don't you think...? Hence the shares were converted to ordinary shares.
So do not remove the reward from hard working employees as this is tarring all with the same brush that has so painted the few so poorly.
In the end the banks will repay the government's investments so the money is safe, yet the BBC reward the likes of Ross and Clarkson with £millions of tax payers money (after all the licence fee is another tax, is it not....?) yet all is forgiven when they make a catastrophic blunder at work and the return on this huge investment is......?
Complain about this comment
As a Barclays business customer, I enquired today about a small business loan, to really take advantage of the 1% BOE interest rate, thinking it may be a good time to expand.
I nearly fell off my chair when I was quoted 13.9%!. I do recollect a couple of years ago in the `boom` time, when BOE rates when 4-5% i was quoted a loan of 10%!
I do see this at not all being the banks fault, and has a lot to do with the government, as if they are still only lending at a punitive rate of around 12% the banks can’t really do anything better, although I have noticed on the other side, rates have been falling consistently with BOE rates, that I now suspect under my bed may have a higher interest rate than my Barclays account.
So to top it off give the bank staff bonus at a time when the have caused so much trouble is an insult. Unless all this money which has been bailed out to the banks instead of being paid back by the taxpayer, make the banks pay with higher taxes.
Complain about this comment
'Bonus' as in 'extra', over and above ??? What planet ??!!
And what about all previous years' outrageous bonuses?
Shouldn't the first responsibility of previous and current banking and financial (dis)services executives be to compensate or contribute to those (born and unborn) now burnt and burning in the wildfire of their catastrophic failure?
This situation demands our anger be channelled into action and not just heat.
Would drug-dealers be entitled to keep their sophisticatedly laundered ill-gotten gains? Justice would require that houses, yachts, cars, bank accounts and the rest, the lot should be seized and the reckless gamblers jailed! or windfall taxes as an absolute minimum.
In any other realm of reality, those at the centre of such a self-inflicted toxic spillage would get burnt first and certainly be prevented from forcing the rest of us (and future generations) to suffer as their human shields whilst they rob us for the privilege!!
Sounds to me like we need taxpayer funded class-action suits to take on Big-Money (Big-Tobacco style).
PS. They're not the only ones guilty, but they're still guilty.
Complain about this comment
Many of the comments here echo the same sentiment; 'the bankers' bonuses should be that they still have their jobs'...so, has anyone in these firms actually isolated their biggest risk takers and loss makers yet - at business unit level, not just in the boardroom?
RBS, Barclays and many European + Global banks have each announced significant job cuts, but it would be interesting to analyse where their cuts are being made? Amongst their 'fat cats' and big-bonus boys, or amongst the back-office and counter staff??
When Lloyds / HBOS announce their re-structure where will their jobs be sacrificed? Surely the priority should be to 'punish' those who are most to 'blame'??
It can't be that hard to isolate which product groups, trading desks and sector specialists contributed most to their company's downfalls, so why aren't we hearing reports of these specific guys being targetted and shown the door? It may reassure shareholders and the general public. Surely the concern is, even if they don't get bonuses this time around, the rot will remain unless the root cause of this banking problem is addressed...
Complain about this comment
robert,
the bonus "culture" is rife through our entire economy.
how can it be right for anyone to be paid a bonus when some people are paid below the poverty level.
l hope you will be investigating ALL areas of the economy to expose those who fail to understand that 10% of the people support only 10% of the economy!
any business that announces a bonus figure it has paid to its people should be asked what proportion has gone to managers and executives and what to the shopfloor.
the public are demanding detail please dont let them down robert.
Complain about this comment
Looks like one of Brown`s right hand men - Ed Balls to be exact - has let the cat out of the bag.
Darling told us a few months back that we were facing the worst crisis in 60 years. Now Ed Balls has come out and said this will be the worst period in 100 years and worst than the 1930s.
I guess it`s time for Gordon to come out and tell us again that everything is fine.
Complain about this comment
#13
"Unless the practice is ended now, public support for the next emergency cash injection might prove even more elusive."
Not as elusive as the difference that would make.
Complain about this comment
Am I alone in wondering why Gordon Brown did not sort this out when he gave the banks £37 billion of our money?
It appears to me he has shown the sort of negligence he accuses the banks of.
Complain about this comment
Robert
The BBC seems happy to join the bandwagon attacking people in the City who got large bonuses for taking decisions to give risky loans to individuals who couldn't repay them, in return for huge short-term bonuses.
At the same time the BBC seems happy to attack banks for not wanting to give a risky loan to Anthony Worrall-Thomson because his business was suffering and might not be able to repay it.
Haven't you stopped to think that the inevitable consequence of so viciously attacking bankers for risky lending decisions is that they won't take ANY lending decisions - and that is the WORST thing that could happen right now.
I also think you have a responsibility to separate the bonuses for corporate merchant bankers from the tens of thousands of ordinary staff who have worked damn hard in the past year - and they are likely to have THEIR bonuses removed too, thanks to an inaccurate media and political witchhunt.
And NO - I don't work for a bank.
Complain about this comment
#18
"brown says"we are leading the world in sweeping away the bank bonus culture"
Interestingly ambiguous words. I heard it reported the GB used the term "Sweeping aside", which implies that it is to be moved leftward or rightward.
Maybe such an action would serve some kind of purpose but wouldn't both "sweeping away" or "sweeping aside" be more effectively replaced by "stopped".
Complain about this comment
Robert, in common with most politicians and news reporters have shown that either they know nothing about corporate remunerations schemes or they choose to ignore the facts.
I have rarely seen such poor reporting provoking ignorant comments.
Robert should acquaint himself with all of :
Profit Share; Performance Related Bonus; Performance Related Pay; Share Options; Executive Remuneration Schemes; Performance Appraisal;
Surprise, surprise they are all different and cannot be lumped under a general heading of Bonus anymore than anyone who works for a bank can be termed a banker.
Perhaps a dose of work in the real corporate world might help.
Complain about this comment
Gordon Brown says we should only reward success and punish failure? Well here is that man that claimed to be the prudent Chancellor, who put an end to the boom and bust of the Tory years, who saved the world... etc.
Come on Robert - do your duty as a public broadcaster and demand that Gordon pay the price of HIS failure and resign now or go to the polls.
Complain about this comment
#6
Ant and dec get 50 million!
Is that true?
Complain about this comment
Robert
When is the BBC going to have a go at the extortionate salaries paid to some of its entertainers and executives?
If £500,000 is an extortionate amount for the CEO of a multinational company, why is £6,000,000 a fair amount for taxpayers to have to give to Jonathan Ross for sitting in a TV and Radio studio for a few hours each week?
If we are going to seriously start a debate on wage control then maybe the BBC should start with its own staff?
Complain about this comment
RP: The answer is the one given by the Tory leader David Cameron today, which is that if taxpayers hadn't rescued those banks then those employees wouldn't have jobs, let alone bonuses.
Makes sense, doesn't it?
Complain about this comment
#69
The smart bank was given enough rope to hang himself all on his won.
Complain about this comment
No Bank employee should recieve a bonus their excuses smack of it wasn't my fault I knew nothing about it but please give me my money.
Let them stand in line like Woolworths employees waiting for their employment benefit.
We should thank The ex Prime Minister Mrs Thatcher and her policys for creating these people. It stems from the preachings of the time "Greed is good" and "Money is God"
Complain about this comment
Referred.....again!
And all because I gave an insight into what goes on at banks at the junior level.....so I will try and put it another way.
If you're earning 16k and there's an opportunity to earn another 4k on top as a bonus on targeted sales, are you going to do what's in your best interest or the client's?
Also if your branch manager's bonus is reliant on the junior staffs' bonuses and the regional directors bonus dependent on the branch managers' bonus, are you going to do what's in your best interest or the clients?
Since the men at the top get paid bonuses depending on the sales targets achieved by the men at the bottom, and believe me the slice of the pie is bigger, huge, the pressure applied by the top brass is proportionate.
The whole system, like many of our institutions (message to moderator: but not the Beeb) needs looking at because there is a very unhealthy elite who are desperate to win at all costs even if it means casualties along the way.
Bonuses are not all bad if offered properly, are thought through and paid only if followed ethically and there is a positive result.
Complain about this comment
#85: What nonsense.
Had the government kept the preferred equity it had taken, the taxpayer would have been repaid eventually. But it seems the government only took preferred because it felt the public would accept a bailout in that form. Then it converted it into common without a murmur of debate. It turned a taxpayer loan into a freebie. We will not get it back. It will disappear into the black hole of loss provisions. Common equity is lower down the capital structure and first into the fire. To reiterate, that equity will be used for writedowns when BTL, managed property and more retailers go bust.
The employees can share in the bad times as well as the good, just like the rest of us.
Complain about this comment
#25. somali_pirate_SP500 wins the best post prize.
congratulations!
(and all without the promise of a bonus too).
Complain about this comment
IT'S OFFICIAL WE ARE IN A DEPRESSION
Gordon Brown said it, now Ed Milliband, or whatever he is calling himself now, has let the cat out of the bag.
"The economy is going to define our politics in this region and in Britain in the next year, the next five years, the next 10 and even the next 15 years.
"These are seismic events that are going to change the political landscape.
"I think that this is a financial crisis more extreme and more serious than that of the 1930s and we all remember how the politics of that era were shaped by the economy."
He is GBs second in command, was a senior advisor at the treasury and his wife is now a minister at the treasury. It was she who said on newsnight that the government bailouts of RBS and HBOS were necessary to prevent the whole UK banking system collapsing on monday morning.
There is a way out of all this. Under criminal law mortgages made on false income details are mortgage fraud. Stolen money, ie the house, is returned to the loser and all subsequent sales of the loan are invalid.
It's not an election winner, we're talking over 100,000 crooks, mostly doing respectable jobs. But it is the only way out for the rest of us.
And while we're at it, the guys packaging up these mortgages and those selling on the derived securities knew these weren't AAA rated so they must do time and hand back bonus' and any further profits made from them.
The rule of law can see us through this. It's time this government stopped playing politics with the law.
Complain about this comment
Why are we still discussing this? We own these banks.......WE OWN THEM !!!!
I couldnt care less about whether they believe the grass roots deserve a bonus...without the tax payer they wouldnt have a job!
Gordon - get some balls and stop this madness or Labour will not get back in for another decade!
Complain about this comment
Wow another post by RP on bonuses and yet again a clear lack of distinction between "profit share" and "performance bonus".
A few other bloggers have already tried to explain but the mob seem to ignore it!
With most banks there will not be a profit share (there is no profits) but a performance bonus is a contractual sum on a matrix.
I think a lot of people wither don't understand (or choose not to) with a lot of banks the pay is kept fairly low (as are pay rises compared to a lot of other sectors) with the understanding that you get a bonus if you do well in your own area of responsibility.
It is bleeding obvious this is a diversion of spin from the real problems of our economy onto one of petty jealousy and poor reporting.
One thing I can say if anyone in a bank pulled a stunt of claiming for a second home when in reality they were living with a relative they would be sacked and possibly prosectued!
G
Complain about this comment
There are 2 things to learn from the current crisis:
1 Mega bonus management. We tried it, it doesn't work.
2 Large concentrated limited liability firms providing the services of employed "professionals" divorce that professional from the outcome of his labour. They don't work.
Rolling back the legal services act is now a priority.
Complain about this comment
Well, well!
It's obvious who reads these blogs, then, isn't it!
Maybe not himself, but I smell more cherry picking going on!
Keep it up David, got your finger on the pulse?!
Bonuses are a somewhat 'dirty' trick by employers used to bully staff into selling when said staff are more interested in customer service.
Selling products like credit and insurance are given as targets and disguised as customer service.
Precisely why I left banking-I hate selling. If I'd wanted to be a salesman, I'd have joined a double glazing company.
Good customer service is NOT forcing a sale on a customer, it is knowing your customer from listening to them, so you can help them when they need it, not because your branch needs extra insurance sales to make their targets.
It's an appalling practice.
Bank staff's pay should be linked to good customer service of the old fashioned kind.
And NO bonuses!
Complain about this comment
And what is going on that this perpetual bonus business is hiding?
Seriously looking like a smoke screen!
Is there really absolutely nothing else you can do a blog about?!
Come on, get real-enough time on this and banks.
Focus on the real world, not guilded cages and ivory towers!
Complain about this comment
does Mr Varley really think it appropriate that someone earning less than his cashiers should subsidise thier bonus. Is it right that children who have not even started thier working lives yet should be shouldered with a punitive tax regime so that 'Mr cashier' can go on his annual jaunt to the south of France??
On a wider note...until banks and governments realise that the business model they have been worshiping for the past decades does not work , they will not be able to sort out this sorry mess.
Complain about this comment
It's easy. No bonuses for anyone in any bank that's benefiting from taxpayer cash or insurance. Let every bank employee be grateful that they have a job at all.
Do these people not realise just how parlous our economy is right now? The situation is very bad and most people are still blissfully unaware of the economic and social hurricane that continues to move towards us.
If bank employees are convinced that they have a divine right to a bonus - at my expense (my job's on the line, by the way) - then they should walk. Leave their bank. Take a chance along with the other 6 million people in the UK on some sort of state benefit or other (that figure is rising fast), and let's see if the ex-bank employees demand bonuses from their new employers.
Let's see if our politicians can think this clearly on behalf of battered savers/taxpayers like me. Don't hold your breath.
Complain about this comment
David Cameron is absolutely right and if Flash cannot see that by now and cannot judge the mood of the country without us bloggers having to spell it out every two minutes then what chance.
He should have let the lot go down the pan they could have had a good 50% off just before Christmas, by now the country would be in less debt the rich foreign investers would be steaming, but still trying to sell us stuff because they have no other customers, particularly if the Yanks had followed.
The bonus would have gone to the taxpayer in the saving of all the bailout money.
The other bonus would be in using cash instead of cards and trust me we would all be a lot more careful with cash than with cards.
Complain about this comment
Effectively, the government has extended an overdraft facility to the banks secured by shares. What really angers me is that these corporate directors attempt to justify their ridiculous salaries yet they carry absolutely no personal financial risk themselves.
Any small or medium size business owner/director is asked to sign personal surety before a bank will authorise a facility. Whilst it may be a little late to rectify the past excesses it would definately sharpen the future decision making of corporate board members if personal surety clauses were included in their contracts by law.
Complain about this comment
As an addition to my previous post. As a small business owner myself, if we are short of cash my staff get paid their dues first before the directors get paid. There are millions of business owners worldwide who are aware of this fact of life. In the case of board remuneration the question of bonuses shouldn't even arise. The question should be asked of these "concerned" gentlemen why they don't pay their staff first and then themselves if there's any money left in the budget.
Complain about this comment
Do you know I have just fallen in.
At first it was the US, but they got the hump.
So now with the help of the Press including RP it is the banks.
When as we all know it was really Flash.
Nice one I nearly fell for it.
Complain about this comment
Mr. Peston,
With all due respect, your position as an unbiased journalist is becoming slightly questionable.
Banker-bashing may be fun and easy but some of those people are working all hours to try to make things better.
Some of those people may rather be spending an hour or so with their children.
Some of those people's families are missing them...just because those 'bankers' are trying to do the right thing and working their socks off right now.
The Chelsea guy is going to get 15m for doing a bad job....so just perhaps this is a cultural rather than a 'banking model' issue.
Just a thought.....
Complain about this comment
THE PUBLIC SIMPLY DO NOT ACCEPT THAT FINANCIAL SECTOR WORKERS ARE WORTH ANY MORE THAN FARMERS, POLICEMEN, DOCTORS, PILOTS, SMALL BUSINESSMEN, and all the other workers who create real wealth.
The bankers are supposed to SERVE, not help themselves.
The "golden panacea" of a rampant financial sector simply hasn't worked.
All governments have got to find another way forward, perhaps concentrating on quality of life.
If the City greed machine is not switched off, in 10 years time 90% of national wealth will be in the hands of 1% of the people....risking political and civil unrest and even a communist Britain.
Nail them down....regulate them.
Complain about this comment
I've worked for manufacturing companies for 25 years. If my company does well, I get a small bonus. If it doesn't, I don't, regardless of whether I have achieved my objectives, brought in many business improvements etc. Nobody should be paid bonuses in the bailed out banks
Complain about this comment
I am an exbanker but unlike many bankers, actually have degrees in finance and a member of a reputed instute of accountants. My basic problem with this industry is that too many people without basic business degrees are leading top banks. Such as applegate. This explanation that the dangerous increase in barclays positions is due to derivatives is too vague to many any sense. Mr. Chris Lucas, esteemed ex partners of PwC needs to come clean and explain exactly in plain english what this means. And Mr Lucas you should know this (I also used to work at PwC), that if you cannot explain it in plain english, then it means there is something wrong.
Complain about this comment
The senior bankers want the junior bankers to have their bonus so that as soon as banking situation improves they will be able to claw back any old bonuses, claiming some form of "parity". This would not be parity in a similar amount but the parity of principle, and yes, that means huge bonuses.
Basically the big bankers have not woken up to the new world and are hankering for the old. Well, the only hanks they should be getting out are hankies.
Complain about this comment
#120 exbanker 007
Sorry mate but you ARE still part of the problem. The public have yet to turn their focus on the havoc wrought on industry by accountants.
Cost of Everything and Value of Nothing maybe an over-simplification but there is still a great deal of truth here!
Complain about this comment
Its easy. When I worked for a US company any bonus was paid in share options.
Thus ensuring that only long term gains and company growth were rewarded.
So whats wrong with paying the greedy idiots in shares options thus ensuring that they have at least one eye on the future of their company???
Complain about this comment
It wouldn't be a bad idea to get rid of targets, as well as bonuses.
Targets cause a lot of problems. Most of them are random numbers with no thought given to what is reasonable and/or responsible. Look at the targets set in the NHS for example, they don't seem to provide the end-user with a better service. They allow dozens of bureaucrats to justify their existence by ticking boxes instead of doing something useful like treating patients...
When I was in the Financial sector for a while, I sat behind a desk facing real customers in the real world. I noticed that my targets changed on a daily basis. It was obvious that they were only set so that my bosses could achieve their bonuses. There also seemed to be nothing in it for me, only false promises...
I noticed that my immediate boss always found a way of claiming any result that I achieved for himself, so that he ultimately took the commission not me. It was a swindle. He was morally corrupt as well as...
Area Managers were only interested in targets, not quality of service to customers, professional standards or anything like that. All that mattered to them was relentless hard-selling of Financial Services...
I told my bosses what they could do with those targets, and left the industry. They couldn't understand it, but I think time has proven me to be right...
Complain about this comment
Surely the answer is simple. Let the banks award thier undeserved bonuses, but intoduce a one off targeted tax at 99%, (or 100%, or why not 110%?) for all bonuses awarded in the financial sector to anyone on a salary of over, say £50k per annum. I'll leave it to others to work out the appropriate salary level to introduce this, but such a tax would get around the squirming of the banks regarding their 'legal obligations' to pay these bonuses. Let them pay them, and then pay them back to us, the taxpayers who have saved their insolvent and badly run banks and jobs in the first place.
Complain about this comment
This is terrible - surely something can be done to help these people?
I for one would gladly pay more tax if Gordo could guarantee that the money would go to these guys under his "no banker left behind" scheme.
Complain about this comment
We seem to be going around in circles
Let them Fail, Fall and go to the wall
They screwed up big time (lost money)
Billions were wiped off Pension Funds
Trustees should sue them in Court
UK is bankrupt & can't afford bail out
Complain about this comment
Surely it's simple. Banks have too many toxic assets (created by bankers) and not enough cash (supplied by taxpayers). Their bankers are requesting bonuses. (And of course they deserve rewards in kind for what they created). Nobody says these have to be in cash. So why not allocate the unwanted toxic assets to bankers as their bonus rewards? The bonus pool becomes the "bad bank" and each banker gets a share of the CDO/CDS alphabet soup that his/her colleagues created. No better way to get bankers policing their peers to prevent silly product creation than by sharing out the mistakes. If it's true these products will eventually become liquid assets, then why not simultaneously reward bankers and ask them to have faith in the products they created? That way the cash in the banks is used for lending, not for bonuses.
I read somewhere that Credit Suisse has already begun to deploy this idea... maybe Alistair Darling should use it too!
Complain about this comment
107. geordiewiz
''a clear lack of distinction between "profit share" and "performance bonus".
A few other bloggers have already tried to explain but the mob seem to ignore it!
With most banks there will not be a profit share (there is no profits) but a performance bonus is a contractual sum on a matrix.
I think a lot of people wither don't understand (or choose not to) with a lot of banks the pay is kept fairly low (as are pay rises compared to a lot of other sectors) with the understanding that you get a bonus if you do well in your own area of responsibility.''
.............................
That just about sums up the banking mentality. You can perform well and whether a profit is generated or not then a bonus is due. There is no other industry I can think of that where it does not matter if the business functions profitably or not, you will still expect to keep your job and expect a bonus across the board. For people living in the real world involved in business if you make a loss you will have your job at risk. If you lose your job a lot of other things are at risk. If you cannot get you head around that then you cannot understand the 'mob', as you call them, and cannot understand the disquiet the banking mentality causes. It is the banking mentality of there being no correlation between risk and profit and bonuses that helped create this situation. Incidentally the mob collectively are your customers. But then banks collectively have never shown anything other than distain for customers have they. What you do not appear to grasp is if there was any trust in banks it has now gone and banks will suffer because of it.
Incidentally I see Sir Fred ex RBS is reported as complaining that the rescue of RBS was less of a negociation and more of a drive by shooting. Hmmm, at least they met and talked and were rescued, which is more than many banks will be doing with errant customers. Dont you think it is extraordinary that a bank in trouble believes it should have kinder treatment than being rescued. The rescue is not of sufficient quality to please a banker. The double standards of the treatment requested by a bank CEO and the treatment banks give to customers is marked. Just when did a bank rescue a customer. Oh not their job. Quite. Then nor is the Taxpayers job to rescue banks who cannot manage their business. As for banks that are not needing taxpayer money they can do what they want.
Complain about this comment
Several points to make here.
1. If bonuses are to be paid then they should only be out of profits. Noprofit - no bonuus
2. Bonuses are another way to avoid paying your dues to society.
These will normally be free from employer and employee NI contributions with the earnings threshold being breached.
At 10% employee contibutions on a £5billion pot that equateds to a nice little £500Million avoidance scheme.
Complain about this comment
of course accountants are part of the problem. Only only needs to look at cases such at the massive fraud at Satyam and the role that PwC played in not detecting such a massive black hole. Howeer my point is this. To become a surgeon you need training right? same for a lawyer right? same for an accountant right? So how on earth do people such as applegarth with no business degree or training become CEO of large banks? Too many people of mediocre educational background work in the back offices of these banks. I have seen people who o level qualifications work as an Assistant VP level earning in excess of 70K at a very well known german investment bank. These senior bankers should be subject to annual psychometric testing to see whether in fact they are able to deal with complex issues. We tend to think that experience (past performance) is a good indicator of future performance. But is this validated annually? hindsight is 20-20 but in fact was fred the shred mentally sharp enough to be able to do his job? is John varley in his senses when Barclays assets are in excess of the UK economy or is this another disaster waiting to happen? The fact is we are not being told enough and the explanation of derivatives simply is a cover up at the highest levels and demands urgent FSA investigation.
Complain about this comment
Bert
The last 10 blogs have been about banks. Financial services are only a small part of the economy. When are you going to run some blogs on technology, manufacturing or other key part of the economy? I realise this may take you out of London and out of your comfort zone, but I'm getting bored of financial services now..........
Complain about this comment
of course accountants are part of the problem. Only only needs to look at cases such at the massive fraud at Satyam and the role that PwC played in not detecting such a massive black hole. However my point is this. To become a surgeon you need training right? same for a lawyer right? same for an accountant right? So how on earth do people such as applegarth with no business degree or training become CEO of large banks? Too many people of mediocre educational background work in the back offices of these banks. I have seen people who o level qualifications work as an Assistant VP level earning in excess of 70K at a very well known german investment bank. These senior bankers should be subject to annual psychometric testing to see whether in fact they are able to deal with complex issues. We tend to think that experience (past performance) is a good indicator of future performance. But is this validated annually? hindsight is 20-20 but in fact was fred the shred mentally sharp enough to be able to do his job? is John Varley in his senses when Barclays assets are in excess of the UK economy or is this another disaster waiting to happen? The fact is we are not being told enough and the explanation of derivatives simply is a cover up at the highest levels and demands urgent FSA investigation.
Complain about this comment
the point of a bonus is that they are surely discretionary and gives the employer to chance to keep a rein on fixed costs
if the business doing well good bonus if not hee haw
surely cannot be that complicated and these bank staff at whatever level and no matter how they performed personally over the last few years have reaped the benefit of it
Complain about this comment
Could someone enlighten me? My impression is that, despite the "recapitalisation", RBS ansd maybe LBG would be insolvent without BOE guarantees.
So why can't the BOE pull the plug, put RBS into administration, over next weekend say, and make emergency provisions for account holders? If it's officially bust, then those expecting bonuses would not be secured creditors. It would also stop the other "toxic debt" becoming sovereign debt.
Accounts and some branches could be transferred to the Coop and the Post Office. On a personal basis, that's what I shall be doing anyway.
Vote with your feet!
Complain about this comment
What a damning indictment of our society, that companies need to dangle huge incentives to attract "talent", and, more worryingly, that this "talent" gets starry-eyed at the prospect of the riches on offer.
How apt the title of a book by Alfie Kohn that reveals the endemic faith we place in carrot and stick methods of manipulating human behaviour:
"Punished by rewards"
Complain about this comment
John Varley has NO finance qualifications either : times re-print. When a bank appoints appoint a ex-lawyer with no accounting qualifications as a CFO, is this another applegarth in the making??? doesn't anyone find this strange?
"That thought-out approach has characterised Varley’s rise through Barclays. The only son of a Coventry solicitor, he qualified as a lawyer in London before joining Barclays as a merchant banker in 1982. Since then he has worked in every corner of the organisation, recently as finance director, an extraordinary feat for someone with no accounting qualifications."
Complain about this comment
I see a solution.
Government says 'any bank who wants more Government money shall not pay any individual a bonus of more than £1000 in any 12 month period from February 2009 onwards'. This avoids penalising hard-working junior staff.
Any bank shown to have exceeded this limit, contract or no contract, will be placed on a published list of banks that will receive no more Government money.
Then let the markets decide whether the bank made a wise commercial decision to retain its important people. Or not.
Complain about this comment
It is beginning to look like Barclays has a two tier setup, the investmant banking area and the rest. If you work in the former you are probably deemed more "valuable" and will receive better bonuses.
If Barclays reward staff at Barclays Capital in a way that is not equitable with other divisions, then they will have made an error.
The attention being giving to the "investment" side (if one can use a term for the division that led to most of the losses) is already causing bad feeling in other divisions, like retail and commercial.
What is particularly upsetting for some, is the plan to pat good bonuses to ex-Lehman staff who have only worked for Barclays for a few months, is this any way to earn the respect and loyalty of your other commited staff?
Complain about this comment
If the tax payer now owns 70% of RBS and 40% of HBOS, should we not be entitled to a bonus as we are the ones funding this debacle. Brown recommending that workers should 'waive' their right to a bonus - this will never happen and no blame can be put on those workers who fail to 'waive' their 'right'.
My wife works for a large and respected broadcasting corporation, her bonus is included in her contract, but every indication is it weill not be paid. However, I am sure if she were asked to make a concious decision on whether to accept the bonus - then she would without doubt.
Surely the best way to help these banks out is to reduce their risk and their bad debts...most debts are held within mortgages, so here is a proposal: Rather than the bankers getting the bonuses as a result of having our tax funds to play with, any bonus funds available should be given to those tax payers that hold mortgages with the banks. That will have a positive impact on: 1. we get more disposable income to put back in the economy. surely this will act as a stimulus? 2. the banks reduce their debts, therefore reduce their exposure to risk and therefore they get to keep their jobs. Thoughts? Yes probably very naive!
Complain about this comment
Another Day +
Another Dollar
Feel it closing in
Day in day out
Day in day out
Complain about this comment
The banks should be split back to what they used to be high street bank should be just high street bank Investment banks should be investment banks (the old Merchant banks) then if they screw up they go down without taking the whole system in such a spectacular way
Businesses should stick to what their core activities are and stop medling
They want to sue if they don't get their bonuses, let's call their bluff. Poor Londoners
The head hunters said they are always looking for good people, well I am available, much cheaper, probably much dedicated and committed.
Did you hear about that poor banker who wanted her bonus because at the end of the day she only earns £95K, my heart bleeds, how she must be struggling.
Huge bonus payments meant all the city bankers went and bought properties outright in parts of the country like Cornwall and even overseas (Northern France etc) and they have completely prices the locals out of the market.
May be it is the time of Birmingham and Manchester and other cities to rise
Did you hear Obama speech on his stimulus group, he had economists and 'people who think they are economists' because in this day and age 'everyone think they're an economist'
Complain about this comment
From the BBC website - ''The government is trying to use moral pressure to persuade the banks not to pay big bonuses and bankers not to accept them.'' (Q and A bank bonuses)
Another brilliant strategy from HMG. Bound to be a success, asking bankers to do something not in their interest.
Err when is HMG going to recognise it also had a part in creating the mess and also pay some sort of price. After all what is good enough for the goose is good for the gander. It is like Tweedledee asking Tweedledum to slim and Tweedledee still being intent on stuffing his face.
From the same webpage I note that banking industry bonuses went from 5billion to 15billion in the last 3 years so cutting back drastically on bonuses, or even zeroing them for one year would simply redress some of the ridiculous growth over the last 3 years. How anybody in the banking industry can say they have been hard done by is beyond me.
Complain about this comment
Any bonuses to Staff should reflect returns to Shareholders.
IE if the Shareholders get nought because the Company is not profitable then the Staff should not get any bonuses.
It is crazy for the Directors and Staff of the Banks to believe that the Shareholders, Public and Private owe them a living !
The Bank Directors and Bank Staff are going to learn the real meaning of Free Market, red in tooth and claw.
Complain about this comment
Varley is a politician - he says the right things but they are transparent lies to hide where the real bonuses are going (traders and huge risk takers). No Mortgage adviser has hit a single target this year - so they aint getting a bonus anyway in fact many many are out of work - what a totally facile comment he made to you in that interview.
Complain about this comment
The only way to inject demand is to raise the Pay (Salaries) of the Workers.
The only way the Gov't can do this significantly is to raise the pay of Public Sector Workers.
Last year ten percent might have helped.
As more and more Private enterprises fail the size of the boost via Public Sector pay needed to kick start the economy will grow.
I estimate that a pay rise of forty percent to the Public Sector is now the amount required, to actually make a difference to Britains economy.
Of course Politicians will not consider this because they are wedded to the very policies of worker wage suppression that have helped put the hand brake on the British economy.
If people are too poor to buy goods or borrow money then they cannot do it.
Lowering workers pay cuts the throat of the consumer beast preventing that part of the economy from functioning.
Complain about this comment
I work for a small business, and up until Christmas just passed have received very generous bonuses, as have my staff. With current market conditions our bonus has suffered, and rightly so. A bonus is exactly that, and should be paid when business is booming. Unfortunately for the bank staff, the footsoldiers so to speak, cashiers and mortgage advisers and the like, their bosses appear to have been unable to work out when their business was booming and when it was busting.
This affliction appears also to have infected government at the highest levels. Let's not forget the 'genius' that was Gordon Brown, as he steered our economy through such fantastic growth. 'No more boom and bust', wasn't that what he said? And today, as 4 ex-bankers go in front of a hypocritical panel of MP's, I feel the need to ask a few questions of myself.
I've been feeling much the same as the rest of you, watching from the sidelines as Freddie Goodwin, Andy Hornby et al have taken it upon themselves to potentially ruin the future for our children. But realistically, in doing so, have they not secured their own childrens future? And in their position would I not have done the same thing?
And also let's not forget that it was never the job of a banker to secure OUR childrens' future. That job was always, and still remains with Gordon Brown and the Labour government. And today, as we watch the bankers apologise, I can't help wishing that I could chair such a panel of aggrieved voters, a dustman perhaps, a shopkeeper, a doctor, a van driver, a teacher, with politicians sat opposite me and demand some answers of my own.
The bankers aren't going to pay their bonuses back. The politicians aren't going to ask them to. We are watching a farce, and Gordon has the starring role.
Complain about this comment
If Mr Peston can get to keep his job and get paid for essentially writing about a subject he understands very little about and is frequently out of his depth, then i guess any one can.
This is not making out a case for the bankers or launching a personal tirade against the writer (though it does seem so). This blog has no place on a BBC website, it lacks a balanced view which the BBC prides itself on.
I have been reading this blog for the past few days and I cant help thinking how Mr Peston is playing to the gallery without providing a well rounded analysis of the matter.
Is he using the BBC platform to make populist statements with a view to joining politics?
Complain about this comment
131. exbanker007
''..... is John varley in his senses when Barclays assets are in excess of the UK economy or is this another disaster waiting to happen? The fact is we are not being told enough and the explanation of derivatives simply is a cover up at the highest levels and demands urgent FSA investigation.''
I agree this point. In fact when it was casually presented in the previous blog that Barclays had nearly a trillion of stuff in one hand which they were balancing with nearly a Trillion of stuff on the other so there was a net borrowing and lending balance, my reaction was what a load of tosh. If the stuff in one hand goes sour even a small amount there is a very very big problem. But stuff in hand doesnt go bad does it. Not much. Well apparently some stuff goes bad by the ratio of 8 cents to the dollar give market value established in summer 2008 before things went really bad.
As a bank evidently sought capital from shareholders in Spring 2008 on one set of figures and another much worse set of figures came out a matter of a few months later it is difficult to believe a word that comes out. It is similarly difficult to believe any stated profit or any stated loss because you do not know what is hidden in the accounts. And hiding stuff has been part of the game by definition. Hence the collapse in share prices for many banks.
I would like to see the FSA investigated also. Hector Sants was too damn comfortable in front of the Select Committe. Appeared to be almost smirking at times and saying not my job, not in the FSA brief. Well its somebodies job. The FSA appears to see its role as a static one based on a brief set at the start of its opperation. It does not appear to see its role as identifying sound, ie evolving regulation and presenting recommendations for such development. Otherwise it would have been more on the ball. And an investigation it Browns role in all of this would not come amiss.
Complain about this comment
Lets not forget the bank clerks who have worked hard to provide customer service in local communities and have no connection with the investment bankers in the City. The average bank clerk salary in Hull is only £15k compared to an average investment bankers salary of £63k in the City. The £100k+ top earners who were responsible for the present sitation and are subject to the current storm are a very small number of total banking industry employees. 15% bonus for a Hull bank cashier is £2.5k - topping their salary up to £17.5k whereas a bonus for a top earning investment banker could be more than £250k - these are the bonuses we should be concerned about - and these are the bonuses the traditional bank worker has been complaining about for the past 20 years. The traditional banker has also long been concerned about the short term reward culture and the uncertain risk profile of a lot of the transactions completed by the the "rocket scientist" bankers - as well as the very easy credit available to households over the past few years. It amazes the tradionalists that the FSA, Bk of England and Treasury were not equally concerned. The so-called regulators are equally culpable for the present situation.
Complain about this comment
we are all being tricked, more smoke and mirrors from the bankers...
read this and learn...
http://blogs.ft.com/maverecon/2009/02/accounting-according-to-barclays-declining-creditworthiness-as-a-source-of-profits/#more-468
Complain about this comment
142. kooltidings
''Did you hear Obama speech on his stimulus group, he had economists and 'people who think they are economists' because in this day and age 'everyone think they're an economist' ''
Well it appears even easier to be an economist than almost everything else so its a pretty low level aspiration. Lets see. Nov 2008 recession coming (even though it is obvious it is here already, just a small point) economists sez lets say 1 percent neg growth 2009. Early Dec 08 lets say 1.5, then up to 2.2 in late Dec 08. Second week of Jan 09 lets say 2.4. Okay now end of first week of Feb 09, raise it to 2.9 percent. What a load of bull. Or lets look at the BoE committee mid 2008. One lonely voice saying iceberg ahead, everybody else tut tutting and saying hes a pessimist they dont come this far south. And I dont think they would be any better if you said you'll lose a body part dear to you if you get it wrong. And policy made up by this lot is supposed to save us. Absolutely useless by their own mouth. Pick n Mix sweets with numbers on them would be more fun and just as accurate.
Complain about this comment
Apparently according to Mr Peston this morning on radio 4 'he spends his life with senior bankers'
so #25 and others we can't expect any interest in any other topic whatsoever
Complain about this comment
No bonuses in the failed banks. Period.
Let's now shift the debate to reducing the inflated salaries of those who are only there for the grace of the taxpayer.
Complain about this comment
It isn't just the bonus culture that is wrong. I have the impression that, at last, the government has accepted this. Yvette Cooper, speaking on the Today programme yesterday and later on TV, implied that the whole remuneration should be looked at.
For years, financial institutions have paid far too much, and have distorted the pay in other sectors. It is nonsense to suggest that the "brightest and best" are needed by the banks. They are needed by medicine, law, engineering, science, education, transport, etc.
Greed, not special ability, has been the driver of some young people into finance. Hopefully there are able students now who can be recruited from university into ethical banking.
The government may well be hamstrung by existing contractual agreements that banks have set up. However, there is no legal compulsion on our government (and the tax-payer) to give guarantees of support to the banks. I suggest that all banks are told that the maximum annual remuneration, including bonuses, for anyone with a fulltime job in a bank must be less than £300k. This monstrous figure is above what top people in most other sectors can earn. Any bank that pays more than this after (say) 1st March 2009 would have the tax-payers’ guarantee of 50k for savers withdrawn. Then banks wouldn't dare to behave immorally.
In answer to the comment that, without high rewards for the finance sector, "The talent would have gone elsewhere":
Why should the finance sector have "the talent"? It would be better if banks employed ethical people, and more of them. Then they would not be so rushed. I do not care if some bank staff leave. Let them use their arrogant “talents” elsewhere.
My main point was and is that the total remuneration package for the financial sector is too high. I am fully aware of the demands of the legal and education sectors, with a good knowledge too of science and engineering careers. Why should finance get the financial perks with which they can buy privilege?
I know the solution. Educationalists get first choice of school and university for their children. Lawyers get free access to justice. Estate agents (NOT bankers) get the biggest houses. Engineers get given the best cars.
What twaddle bankers speak.
The government is being feeble by not realising the power that it has.
Complain about this comment
The people of Lilliput knew how to avoid bank crises:
"They look upon Fraud as a greater Crime than Theft, and therefore seldom fail to punish it with Death; for they alledge, that Care and Vigilance, with a very common Understanding, may preserve a Man's Goods from Thieves, but Honesty has no fence against superior Cunning; and since it is necessary that there should be a perpetual Intercourse of Buying and Selling, and dealing upon Credit, where Fraud is permitted and connived at, or has no Law to punish it, the honest Dealer is always undone, and the Knave gets the advantage."
(Jonathan Swift, 1726)
Complain about this comment
Dear Robert,
In light of Ed Balls recent down beat comments, you will hear well before us that 'sovereign default' is at the gates of the UK Treasury.
You very kindly shared the Northern Rock default problem with us in good time and we will for ever be in your debt if you also share such UK plc information in good time.
Kind regards,
All part of lifes rich pageant
Complain about this comment
153. mrsbloggs13c2
''Apparently according to Mr Peston this morning on radio 4 'he spends his life with senior bankers' ''
That sounds like fun, doesnt he see this as a problem. Must be like visiting a lunatic asylum everyday. The grasp on reality appears limited in that environment.
Complain about this comment
Does anyone know how much a cashier starts on at Mr Varley's bank? I will tell you... £12,000 per year. That is less than £7 per hour... less than many uneducated jobs.... a branch manager... £20,000... that is less than the average UK wage!
Is anyone telling me these people do not deserve a bonus, which is on average £1,000.
Many of these better people can move jobs to the civil service where performance is not judged... if you meet you targets good, if not, never mind! You have been sick 20 days this year... no worries!
Bank workers are on performance related pay... judged against their peers!! If you provide better customer service than the next cashier, then you should be rewarded.. otherwise it will create a culture of nobody caring about their work or going that extra mile for the customer... just like the civil service I would say... except the bank workers at your local branch are on less money...
Complain about this comment
It seems that Barclays have lost it. They appear to be reducing bonuses by 50% for those above a certain level only.
The idiocy of this however is that people who performed very well (A rated) may get a smaller bonus than some of their own staff who were rated B.
Thus the B performer gets a larger bonus than an A, even a boss who is an A !!
This is, plainly and simply, rewarding failure.
If this is true (and it seems to be) then it demonstrates the sheer incompetence of the board.
Complain about this comment
There is a case for performance related pay. It helps to focus the mind on the job you are employed to do rather than writing on BBC blogs, or fannying about on Facebook or checking which football manager has been sacked today or getting back late from lunch or taking a sickie or taking the line of least resistance when the weather is bad or a myriad of other ways time can be wasted and still get paid. These schemes work. Its easy to see throughput. The skill is in deciding which throughput to measure.
There is a case for bonuses to reward exceptional performance. Unfortunately most people want to be liked, including managers and they therefore find it difficult to say.........Mrs Bloggs you have spent all your time blogging, no bonus for you this year. Its just easier not to differentiate. I might accuse my manager of sexual bias or any other sort of bias that we can now claim, if I don't get what I think I deserve. These schemes need good, robust design and management. Done well, they work.
Had the 'market' sorted this mess out, and some organisation or other would have acquired these banks at the right price, I am sure, the subsequent merger would have sorted this out, over time. As seems to be the way with governement interference, you get the worst of both worlds - massive cost and unchanged management structures and organisational behaviour
BTW, I manage myself so will not be paying myself a bonus for wasting all this time. I may blame the BBC for my poor performance and ask for a handout or even better a cleaning lady
Complain about this comment
Pre-pack liquidation of RBS?
That would concentrate minds
Complain about this comment
They’re gonna have to introduce conscription
They’re gonna have to take away my prescription
Career opportunities are the ones that never knock
Every job they offer you is to keep out the dock
Careers
Careers
Complain about this comment
Pay the bonuses in shares valued at 2006 prices.
Complain about this comment
There are as always two sides to every argument, however in this case it appears that what is needed is a little bit of common sense. No the bankers at the banks in question should not receive bonuses-what kind of message is this sending out to other industries in that company failure is rewarded. Every member of the organisation must be held accountable for the business actions-thus the focus should be instead transferred to the decision to take such risks within the banking climate. The chief executives are responsible overall for their company and thus their power should be regulated instead. I agree it is unfair when some employees may feel hard done by but that's business-it's interesting to note how they are complaining now but often seem to revel in big bonuses in previous years when they seem to think they have deserved it. I think the main issue is the size of the bonuses, not the principle itself. President Obama has imposed a salary cap on bonuses for bankers in the US, maybe this should be introduced here.
Complain about this comment
Re: 8 drew_lg
Excellent post, well said.
Also 7, JohnnyZero66, another post well worth reading.
Indeed, as Cameron said, those Woollies workers got nothing, but I bet most of them work harder than your average bank director.
Complain about this comment
It appears to me to be endemic that bankers are incapable of recognizing the wants of the individual versus the needs of the public good. Excessive individualism has become a cultural norm. I am as much a capitalist as any city worker however I like to pride myself with a bit of common sense. The mood of the nation should not be underestimated. They now believe that capitalist economic theory that rewarding individuals significantly, leads to the greater good has failed. We are risking significant and pervasive legislation and regulation unless we prove ourselves capable of managing ourselves. Obama has begun to do it and we are not utilizing the time while our government dithers effectively. Decisive action is necessary by senior execs. Our economy needs capital and investment in order to maintain our way of life because make no mistake, that what we are talking about. We cannot afford to be seen to be taking what appears to be perverse and selfish decisions in the face of such a significant world economic event. The time for action is now.
Complain about this comment
#25, #104
I refer you to Chapter 4 of Alice in Wonderland to see what discussing William the Conqueror will achieve around here. Perhaps it would be worthwhile, however, as it leads to a caucus race, which ends in the Mouse' Tale, the only winner thereby being Cunning Old Fury, whose behaviour is reminiscent of certain Regulators who have condemned us all to death.
Complain about this comment
I'm getting really worked up about this witch hunt directed at anyone working in financial services. Remember, that the financial services industry is one of the largest private sector employers in Britain. STILL generating wealth for the economy as a whole.
I wish you'd properly state the case for bonuses from the perspective of the silent majority of employees, who aren't asked to account for themselves before Commons Select Committees. It goes like this:
The remuneration package as set out in most staff's contract states that pay is made up of basic salary plus a variable bonus dependent on the extent to which individual performance targets are met. So, perhaps a 10% bonus for meeting your agreed targets, with more or less depending on how you do personally.
It's a bit like commission paid to a salesperson, and a key component of the overall pay received.
Lets not forget why banks take this approach. There are two key reasons: Firstly, to incentivise staff to perform at their full potential. Secondly, and key, is that it's cheaper for the employers as most bonuses do not constitute pensionsable salary, i.e the employer doesn't have to make provision in terms of any salary-related pension scheme they might operate. If you don't know what one of those is, ask someone in the public sector; they'll tell you all about them!
So, bonuses are a key part of many staff's pay package, often in lieue of full pensionable salary and they're cheaper for the banks than paying full salary would otherwise be. Many ordinary staff, who believe they will/have perform(ed) sufficiently to meet targets, rely on their bonus to pay their mortgages, fuel and other bills etc. etc.
What would be the impact of denying hundreds of thousands of ordinary employees their bonus? On an individual level it could be devastating. I know people who are at risk of loosing their homes if they can't meet back payments on their mortgages with the modest bonus their expecting. It's a problem across the whole economy, I know, and it effects ordinary people in financial services too.
On a wider level, the impact of withholding bonuses would definitely have a negitive drag on the economy. Is that what we all want?
I don't work in a bank, I just know how the operate. Please can you all put this into a more informed perspective. I'm as vehemently against seniour executives and board members, including/especially non-execs, being rewarding mutiple-salary bonuses; in good times, let alone bad. But to cast everyone with the same brush is totally unfair, and very damaging.
Performance-related bonuses? They sound good, don't they? What happened, though, when it was suggested that teachers should be rewarded in this way, eh?
Complain about this comment
Love it post 160 haha. That about sums them up and their management and begs the question about how on earth they justified their pay in the first place.
Complain about this comment
I wholly agree that the bonus system should not reward failure BUT the shortsightedness of all those baying for bankers' blood and stopping bonuses is staggering. As taxpayers, we are all shareholders in the banks and what we should be doing is helping them recover and prosper (that is the ONLY way we will get our cash back).
Sure we could block bonuses this year and, sure, there arent that many alternative jobs for people to go to TODAY. But we should be interested in the long haul and, if we dont offer the right incentives to key people they will move. Maybe not today but when the upturn comes, they will be gone.
to make this politically more acceptable, the Government is tryiing to focus on the large numbers of branch staff. In fact, the people who will make a difference to OUR INVESTMENTS are the high flyers and successful traders. They are the ones who will not want to remain as poorly paid cisvil servants.
We, the shareholders, will be left with underperforming companies with little talent. And we will have only ourselves to blame.
Its called market forces.
Complain about this comment
What went wrong? Simple really. (1) The cobbler no longer sticks to his last; (2)specialists know more and more about less and less;(3) people want instant gratification and are in for the short term quick gain only; (4) they are very ready to criticise but don't like criticism; (5) which means no one knows what is really happening or why rules were made in the first place; all of which (6) leads to a 'don't rock the boat' culture and (7) destruction and chaos.
As I have pointed out before, it's been becoming ever more prevalent to my knowledge for over thirty years, standards collapsing all the time.
This also leads to the questions that no one will even acknowledge, let alone answer. With so much unemployment, particularly among graduates, what chances now of social unrest and disorder? And how do we prepare for this?
Something about the price of everything and the value of nothing comes quickly to mind.
Complain about this comment
I understand that 3 of these Banking chiefs were recruited from outside the Banking industry. That is the same as employing a Plumber to do an Electricians job.
Perhaps shareholders will learn a lesson from this, don't allow these inexperienced people to run your companies.
The one person on the board that warned about the risks they were taking was sacked. These chief executives are over rated and over paid.
They are just Jack of all trades and Master of none. In the building trade these kind of people are called cowboy builders. These Bankers are no different....just a load of cowboys, only they wear suits.
Complain about this comment
When will some of the criticisms turn to the FSA? They only had four statutory objectives and the first one was:
"market confidence: maintaining confidence in the financial system;"
Which must be said has been failed spectacularly!
A lot has been said to criticise the bankers, however, the vast majority of these losses are associated with mortgages which were sought and issued during an unsustainable housing boom. The issue could've been avoided or certainly mitigated with minimum deposit requirements, a cap on mortgage salary multiples, ban on self certified mortgages unless supported with proper information such as tax records or financial accounts - all easy to do.
Who is more to blame, those who packaged up this bundles of debt and sold them around the world markets, those who sold the mortgage products themselves, or the body that had an obligation to oversee the lot?
Complain about this comment
No 162 refers to common sense. Like Grouch Marx' famous "Military Intelligence", "Common Sense" is an oxymoron. There's nothing so uncommon these days as Common Sense.
And here's another oxymoron - "City Gent".
Complain about this comment
Well post 169, it's obvious you don't work for a bank. Staff salaries for many middle tier management (where most of the bonuses will be paid) start at 25-30k. We are not talking awful salaries here. Also what is "high performance"? Is it selling a significant amount of loans that eventually goes bad but achieves a target? Or is it doing a bit more processing than normal? Or maybe doing some clever analysis or producing a product that exposes the bank unwittingly to considerable risk. If people so believe in their worth they should invest in their company. My suspicion is that they won't. I am personally not against incentivisation, but the current environment shows that it's extremely difficult to judge the value of past performance.
Complain about this comment
Whatever the case for not paying bonuses, contractual obligation need not be one. The Government can simply take a leaf from the bank's book by calling in the loans overnight (and without warning) - causing the bank to enter into insolvency, then set up a Phoenix operation which could re-employ (some) of the staff on new contracts.
Small businesses do it all the time..........
Complain about this comment
The simple solution to these bonuses is to treat them in the same way that other entities are treated when they make "excess" profits - apply a windfall tax.
It is plain that most if not all of these bonuses would not be available but for the UK Taxpayer. So they are, by definition, a windfall.
I suggest a 110% tax rate on all bonues related earnings for the next 3 years. Individuals and their empliyers could apply for a reduction in that tax if they can justify to an employment tribunal that the bonus has been earned from increased company profits that are not related to toxic debt.
Complain about this comment
Post 171....you make the point about employing key people. That is all well and good, but the people who made all these misjudgements are supposed to be the key people. Perhaps this is a result of our declining education standards that have been falling for the last half century, as shown with these top executives and government leaders. Educated idiots all of them. Not an ounce of common sense between them. Of course we have more Universities than nusery schools, but having more doesn't make it better. That is just a ploy to make it look like education is improving. Standards everywhere have fallen and this is the result. The world is not a nice place...God help our children and grandchildren....Best place to be is on a desert island under a palm tree.
Complain about this comment
The idea of a bonus is to reward performance. It is in principle something that might not be paid each year, as it will be paid out of profits. In the banking industry it is widespread, in an industry that normally never struggles to make a profit, because it can milk its customers. So the idea of performance being rewarded is somewhat odd when you can simply, as the banks are doing at the moment, simply increase charges to clients.
I am self employed, and last September, predictably, it started. The letters started arriving informing me about increased charges for this or that. The interest on my current account balance was cut to a nominal 0.1%. All the transaction charges were increased, for handling cheques, automated direct debits, every kind of activity. Anyone who travels overseas regularly will know that airport exchanges are now charging commission in addition to the absolutely enormous buy-to-sell spreads that they operate, and any other method of buying foreigh currency such as cash machine direct withdrawals are now being charged more, and their exchange rate has been relatively worsened too.
So paying someone a bonus for basically cutting my income seems totally unjustifiable. Banks have to go back to being a service to the economy, not a licence to print money for their managers.
Complain about this comment
I work in investment banking. There is no doubt that we get paid significantly more than we deserve to, although that is true of many jobs in the private sector (mgmt. consultants, lawyers, executives at cigarette companies, executives at "gaming" companies, ...) vs. more meaningful professions. However, there are some divisions of banks currently contributing profit and sizable cash flow where if bonuses were eliminated, profits from those divisions could quickly deteriorate.
One area of banking that was paid bonuses last year is corporate finance: advising companies and executing transactions for them. People here don't get the type of rewards that some areas of trading could take, but someone very successful who's worked for 14 years or more could make say a GBP 1 mm a year during the good years.
This is extremely grueling, hard work and competitive with the constant threat of being fired for under performance. It can also generate enormous revenues for the firm, it does not involve (at most banks) risk taking (no trading positions risking huge losses) and has nothing to do with peddling toxic assets or mortgages. It should in fact always be profitable: the primary risk is of simply not winning client business, reducing revenue generation and getting fired (or a zero bonus). A successful team of say 20 in a top firm could generate over GBP 50mm in annual revenues. It doesn't seem unreasonable that successful people in this area should be extremely well paid relative to other business jobs, few of which allow the possibility for this level of revenue generation. Even high pay levels could leave a very high residual profit margin for the shareholders. The other cost overheads are small and there is no capital requirement.
However, whilst this can be interesting, it is not glamorous work. The only "perk" I'm aware of in our office is free distilled water (the cheapest brand). Business trips are economy class. People can go for months without taking a weekend off. It is very difficult to get the job, difficult to keep it and the average career length is probably about 4 years. Successful people can however get paid very well.
If you eliminate bonuses, people will leave, maybe not immediately, but over the medium term. The more senior bankers who generate much of the revenue could probably retire already; the juniors would look for alternative careers or simply decide to work 9 to 5 -- making it impossible to compete for high fee business from clients, relative to competitor banks that not facing these bonus constraints (there are in fact a number of such banks). The profits for the bank/shareholders from this group would deteriorate significantly.
Of course there are potentially far better things in the world that could be done with this number of people, effort and focus. But point remains that, in some divisions, eliminating bonuses could have a negative impact on the profit line contribution.
Complain about this comment
Bonuses in banking have to go.
Does anyone believe that bank managers can objectively measure performance in a way that can differentiate in what are complex and varied businesses?
Robert is right - bonuses have been (ab) used as a retention mechanism. Most bankers are now sitting tight.
Complain about this comment
Surely, bonuses should be related to the share price i.e. the last peak in the share price. Bonuses are only paid when the share price hits the last peak. Good for shareholders and the taxpayers!
Complain about this comment
In my view the problem with the banking bonus system is the sheer size of the potential bonus available. This becomes so attractive that senior executives will do virtually anything to achieve the result. It does not really matter about next year or long term damage to this business. All that matters is getting that bonus.
You don't need many to achieve life long riches
Steve
Complain about this comment
So, at least now RBS has given us the chance to value any bonuses it eventually pays in job losses.
It seems capable of planning 1billion in bonuses, but at the same time MUST shed 2300 jobs "to ensure that we are able to operate as efficiently as possible, especially in the current economic circumstances".
Surely this must kill off any chance of paying bonuses if it is so short of money that 2300 jobs have to go to cope with the current economic climate.
How many of those jobs would the 1billion save??
I have noticed several "ordinary" bank workers on the blogs defending their right to be paid their bonuses.
I wonder how many will still demand their bonuses now they know that their bonus is being paid for in the jobs of thousands of their colleagues.
Recently, employees of several companies have taken pay cuts to save their colleagues jobs...perhaps we will see the RBS staff refusing their bonuses to save THEIR colleagues jobs.
Complain about this comment
Could you say whether it's true that Barclays will have tax benefits from paying the Arabs 10% on recent notes, against the 12% they would have had to pay the tresury for help?
How much difference would that make to them - not clear from recent statement.
Thanks
Complain about this comment
The hypocrisy of these banking managers laying off thousands of their own workers for reasons of "efficiency" whilst syphoning off another billion in bonuses for themselves is simply astonishing.
Complain about this comment
They've got the facts twisted and upside-down again
- the thousands of junior workers do the real work not the jokers and clowns higher up at the top.
- the banking experts work could easily be outsourced to india or china at the drop of a hat
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
There is a distinction between 'bonus' payments and the 'appraisal' system operated by banks for ALL employees. Under the 'appraisal' system the employee has to set and agree to a specific career plan and self development for the coming year. Any fall down on the development will mean that the employee's 'bonus' for the year will be reduced.
I we are saying that this system is not acceptable then we can expect the banking unions to demand a different payment system that will probably cost as much, if not more, than the current system.
In short, staff will be paid an 'across the board' increment meaning that poor performers will receive the same as 'high flyers'.
Complain about this comment
post 181 Thanks for this explanation of the culture of investment banking.
Actually this is exactly right regarding the culture and readers should take note of this post. He acknowleded that those involved in advice can earn massive bonuses and from what I can infer sales to clients. Firstly he acknowleged that perhaps he was paid too much and secondly a bonus of 1m was still less than traders for corporate advice. The justification for high remuneration and bonus was very hard work and risk of sacking.
In my opinion the post only views on side and supports my view about individualism in the city; the personal pressures it brings; the destruction of teamwork; the erosion of the family in favor of the firm and most importantly the fallacy that the Market acts for the greater good ultimately. Greed is NOT good.
There is considerable fear in tackling the issue by governments based on the belief that the markets is more efficient them and that the fundamental economy will suffer. Sitting in a city office right now, I can unequivocally tell you that that is not true.
Gordon Brown has rightly taken decisive steps to recapitalize the markets, I suspect he will have to take even more decisive steps to regulate them properly. When this happens I suspect the markets will act more properly. y
Complain about this comment
Post 190 I am sorry but can you not see that performance can't be rewarded if the firm is doing badly, regardless of the profit share element? This is common sense.
I forgot to forgot to mention in my prior post that investment banks have taken considerable risks on behalf of their clients and their clients have not understood what they were doing. They have earned considerable commissions and consequently it is my assertion that trust will invariably suffer. It is in bankers interest to show restraint. Forget public opinion...Not to demonstrate circumspection will be a recipe for unmitigated disaster with trust and confidence of investors and shareholders. One thing is certain bankers have NOT proven their worth.
sorry if spelling errors doing this from iPhone.
Complain about this comment
Re:post 160 and Bonuses - Load of Rubbish - I work at Barcap and we got ur bonuses today - They stitched Managers and ADs with low grades and hence low bonus and pitiful payrises. All Traders and Senior Managers were sorted out as they are smiling. I will now be changing my hours from 730am-9pm to 730am-530pm. Supposedly if Barclays were so profitable, why haven't the hard working staff been rewarded ? I would have got more tips (Bonus) working in the Public Toilets at King's Cross
Complain about this comment
I don't think we need to worry about the "brightest and best" leaving because their bonuses are cut. At least they can be assured that they won't be prosecuted for criminal negligence and fraud. If they go to the US or elsewhere it could be a different story.
Complain about this comment
Defense from an investment banker.
I think an interesting calculation for your readers would be to estimate where the billions of bonus payments have gone over recent years. You might find that the amount of bonuses that had been "trousered" by "senior bankers" is now worth a fraction of what they received.
* 40% would have gone in taxes.
* 50% of further bonus value could have been eliminated due to share price movements. (1).
(1): most senior bankers (at least in the US) are paid around 50% in cash, 50% in stock. Tax is payable when the stock vests, not when it is sold. Many bankers never sold their shares, some of which are worth close to zero now.
Of course, incorporating some of these calculations might lessen your arguments and detract from the "off with their heads" mentality which is no doubt much more entertaining and enjoyable to propagate. In fact, there are numerous sides to this debate and the example I gave above is overly simplistic. It is no doubt much easier to rattle off an "opinion blog" than a well researched, thoughtful and nuanced article.
I in fact agree that bankers are overpaid. But the quality of analysis and debate from journalists has been pitiful.
Complain about this comment
post 193 Well bravo to your decision to work regular hours. I suspect at barcap your salary is considerably more than the national average. Therein lies an idea. Pay people regular salaries for regular work and hire more people for the same cost as putting all your eggs in one over worked basket.
Complain about this comment
Oh come on 195. You are obviously not familiar with tax loopholes and tax avoidance. Do you honestly think these guys would do these practices if there wasn't a financial incentive? I think the analysis has been simple, straight forward, incisive and more than adequate.
Complain about this comment
post 197.
Yes, I am reasonably familiar with how bankers pay tax, working in banking myself. In the UK the banks pay salaries and bonuses to their employees after deduction of tax. I've never heard of anyone avoiding tax on salaries from a listed UK company. You might be thinking of hedge funds and other less regulated companies, where in fact the salaries and bonuses were enormously higher than banks, although conveniently not referenced in these "blogs".
Of course there was an enormous financial incentive. The point I was making is that, for a number of bankers, much of their previously "ill gotten" wealth has already evaporated.
As usual, much of the debate is centered around opinion formed, without any attempt to at least analyze and present the facts in some detail.
Complain about this comment
One of the reasons bankers like being partly paid in shares is that they can defer tax and they can put the shares in trusts and offshore funds or spread it in non taxable investments elsewhere.
What worries me is that bankers see the necessity of paying bonuses while their company is not making profits on the basis of "incentivising staff" or "keeping staff from leaving". I think one thing staff realise is that this is an extremely unusual environment and they are grateful to have their jobs. This sort of woolley thinking by senior bankers to pay bonuses while the firm and businesses suffers (because they are not lending) and the market disbelieves their profit figures is absurd. My fear is that paying bonuses when potentially 10000 people will possibly lose their jobs in RBS, will be viewed as obscene.
Complain about this comment
At last someone has acknowledged that it is the Global Markets Division which has brought the Bank down.
The vast majority of RBS employees have been doing a good job under very difficult circumstances.
Unfortunately they have seen the value of their shares decimated as a result of the actions of a few greedy individuals.
Complain about this comment
Post 199. Sorry, but that's rubbish.
I've been in banking for 10 years. We'd much rather get cash than shares. Each year the bank takes out tax from salary and bonus payments and summaries of total compensation (incl. shares) are sent to the tax authorities. Maybe some people may have tried to evade tax using offshore accounts. But as far as I'm aware that's illegal and has a fairly high probability of being uncovered. But if you know otherwise, please share with me!
Also we'd rather be paid in cash as if we're laid off, stock which hasn't vested is at risk.
Dodgy tax avoidance schemes are touted by private bankers to super rich to hide assets. Don't think it applies to hiding an income from audited UK cos
Complain about this comment
This morning the P M was told that the banks are not in the real world and was asked if something could be done now to stop their bonus culture. Their 'short term' bonus grasping is simply the worship of 'Mammon'. Money will always have its devotees.Some top bankers are devotees. Hence the need to tightly regulate the long term trading too: and in such a way as to strictly cap the huge bonuses given at the top in order to give those at the coal-face, including cleaners, etc. an acceptable bonus too, which, however small, they will appreciate more as gift and not, as in the case of top brass, as right. Mammon has prevaled, let it now be toppled.
Complain about this comment
RE: mattjudoboy, # 199.
Please give a view on my post as this should be debated.
I do think that consideration of how much bankers have lost from their original bonuses should be discussed openly and is notably absent from Robert Peston's blogs.
I broadly agree with #195. A senior banker who didn't sell his stock, I also know many, has probably lost > 75% of his historic bonus value through tax and share price plummets.
Let us know your detail on how senior bankers at UK companies can avoid tax on their bonuses and salaries. I think it's not possible, but if it's true, it should definitely be known and they should be heavily criticized. Also, if you disagree with the example calculation of bankers' bonus deterioration in #195, how would you calculate it?
These are simple calcs to do and data points that readers should know about and discuss
Complain about this comment
At last Robert gets round to the shareholders. The other day the CEO of Barclays justified the bonuses because they were designed to align the interests of the management with the 'owners of the business' ie the shareholders. So, if in 'shareholder capitalism" shareholders 'own' companies and directors manage to give em what they want, surely they are to blame when the whole thing goes bottom up. But then who are they? Institutional investors are pension funds, unit trusts and insurance companies, selling products to us the consumers who wanted low pension contributions, high capital gains from our ISA's and and a good return to pay the mortgage from our insurance investments and a lot over to take that round the world trip(they died at at early stage of this post millennium crazy capitalism).
So when are we all going to be shamed by the HoC Treasury Select Committee? Or do we just blaim GB for tempting us? (where does the Cameroon keep his money... ?) At least GO was in 'trade')
On China... I have been chatting this morning to my Chinese friend in Shanghai who works for a top British civil engineering consultancy . He is busy with the steel structure for a new Tesco distribution centre in China. We sell em supermarkets while they corner the world market in commodities .. fair do's??
Complain about this comment
so its come out today that lloyds tsb plans to payout bonuses to staff totalling £120 million which represents a cut of £30 million compared to last year/
now as a taxpayer you would expect me to be in the majority and slam the bonus payout.
but as a fellow member of the banking industry i dont,i see the bigger picture.
the bigger picture being as follows.
1)-many of the payouts are to low ranking staff who had nothing to do whatsoever with the overall troubles of the bank.
2)-many of the payouts to low ranking staff will be less than £1000 as an individual payout.
3)-if staff hit their targets they deserve their bonus,which as a banking industry are very very tough and never seem to take into account any economic downturn.
there 3 main points on why bank staff particulay at lloyds tsb deserve their bonus.
some bank staff only recieve an annual bonus which if they work hard for,they should get them whether its in their contract or not,some recieve monthly bonuses which means if they do well on particular month,they should be rewarded as a good month can go a long way to the overall performance for the year to bank and many low ranking bank staff i know at certain banks are ethier on annual or monthly bonuses not both.
if they recieve a written statement stating their targets and then go on to hit them,they deserve the payout whether they are taxpayer backed or not.
the point is bank staff need to be rewarded as if they dont get rewarded sufficently for success,they leave.
then taxpayers lose some very talented low ranking staff whom banks would then have to spend millions on replacing in terms or advertsing ,training and so on.
Complain about this comment
Why should anybody in a company that is making a losses get any bonus at all, they are lucky to still have a job, that goes from top to bottom. All bank employees have to be treated equally and suffer the pain just like the rest of us. In the real world where I sit in manufaturing we are suffering at the hands of inept decisions by greed and huberis, we have to lay off and reduce our workforce to survive with all the pain that brings. I suspect we have seen nothing yet and potentially this financial mess will infect us all by the year end.
Complain about this comment
im sick and tired of people bleating about tax payer backed banks paying out staff individual bonuses that equat to an average of £1000 if that low paid workers works their dam socks off all year.
look i accept without taxpayers help these banks would have collapsed.
but what 84% of the manchester evening news readers fail to recognise is when you dont pay your bonus to a average joe blogs ,joe blogs leaves that bank and goes to work at a organisation that rewards its staff for their loyalty and professionalism and their ability to pay decent bonuses when "individual targets" are met..
the average joe blogs is not the devil investment banker that caused this mess and so shouldnt be put in the same bracket when deciding who should get paid the bonus and who shoudlnt.
the fact is if joe blogs leaves as will a few hundred possibly thousands of others,those taypayer funded banks will have to spend millions re training brand new stafff when they couldnt have spent the same amount or less paying the bonues joe blogs rightfully earned.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
you need to stick with the topic kiki dread
still if you insistent ON SLATING NORTHERNERS,
whats the difference between a london investment financial expert and a 16 inch pizza,the pizza CAN FEED A FAMILY OF 4!!
Complain about this comment
and no doubt the hypocrisy of the moderators will ensure kiki dreads 208 post will be allowed to stand as with some other offensive jokes or comments he/she has written and mine will be removed.
kiki have you ever been up north!!
i take it you have not in the last 45 years.
financial expert ...lol
Complain about this comment
i stand corrected,unless someone else decides to make a point and complain because they have nothing else better do.
Complain about this comment
redarmy
i was only agreeing with you
i said never eat shredded wheat
an acronym for the whole world
i.e. north-east-south-west get it
ps. i went to sheffield arena for wwe raw
Complain about this comment
red
sorry never eat shredded wheat
= NESW the clockwise sequence of the compass
1st year geography
i got 97% in my exam
Complain about this comment
wow 97% pointless but yet impressive.
wwe raw,again pointless but non the less at least i share something worthwhile with you as a fan of that for many years.
but my point was you talk down northern towns a lot something i find extremely disturbing and offenisve
Complain about this comment
salary for 5000 people 20000 pa equal 100 million
tax and ni and benefits say 10k pa equals 50 million
therefore for 300 million we can save 5000 jobs for 2 years
Complain about this comment
The crisis is caused by our egoistic relationships; therefore it won’t go away until we correct our relationships. If we don’t do this, the crisis will keep getting worse due to our constantly growing egoism, like a disease that remains neglected. http://www.laitman.com/2009/02/crisis-may-spread-worldwide-in-domino-effect-again/
Complain about this comment
red x
for the record (I said it already though)
I think front line staff should be entitled to a thousand pound bonus
you can disagree with me again if you want to get poisonal,
it ain't no big thing - i'm used to it and expect it from you
but it would be better to stop as I don't want any emotional
involvement with you. It is better to praise people than to keep
fighting, so good point red keep blogging away like a trooper
Complain about this comment
211 my son likes wwe raw
Complain about this comment
Good to hear that bonuses for general workers are being incorprated into their salaries as that is where they should be. Bonuses are not, or should not, be a right that eveyone gets just for turrning up and doing their job.
Can anyone explain why a failing bank(company) is paying any bonuses at all? Surely any contract should have a get-out clause that says no bonuses are paid if the company makes a loss. Why are the banks above this?
Also, what is all this about deferring bonuses as these top people are so good that they may leave? Let them go and see if they can actually get another very well paid job.
Complain about this comment
cheers kiki dread and i tghink we can leave alone petty squabbles now and have a serious debate on issues.
glad you agree on bonuses.
as for 219 post,agree on the first bit.
getting a bonus just for doing your job is nonsense,however many bank staff actually do more than the bare minimum and go out of their way to help customers and those that do and the ones who achieve their targets deserve their £1k bonus which works out less than £100 per month if you had spread it over the year.
a failing bank like rbs may be paying out bonuses as not all parts of the bank are failing.
rbs is a multi divisional bank so some divisions are doing better than others.
they have many fingers in many pies
Complain about this comment
Even chatting to quite a few "normal" members of staff in the banks, they agree that no bonuses should not be paid to anyone while the banks are losing money. They prefer to keep their jobs.
Complain about this comment
219
Yes, I can. Perhaps a footballing analogy might help you to understand.
If England play Germany and Rooney knocks in 4 goals all by himself, but we still lose 5-4 because of a bad team performance and a load of terrible defensive errors, do you think that Rooney will get:
(a) a pat on the back from Capello and told to keep up the good work?
(b) lambasted and told he will be on the bench for the next game?
Or as a primary school maths question.
The Royal Bank of Brown makes a £20bn loss. It consists of two divisions. Division 1 makes a £20bn profit and Division 2 makes a £40bn loss. The boss of RBB has two choices. Does he:
(a) pay Division 1 £5bn in bonuses and retain that division so that it makes a profit again next year? or
(b) pay Division 1 no bonuses resulting in that division being poached by the Royal Bank of Darling and therefore making no profit next year?
In each case, calculate the loss that Brown's Bank will make next year.
Complain about this comment
219
postscript
Why are you so cynical about the fact that good people within the banks could go and get another job? If a trader in RBS makes £10m for the bank in a year, why would it be so incredibly hard for him to just take his services to HSBC if he doesnt get the few hundred grand bonus that he is expecting?
I could create another footballing analogy for you if you like, but we will have to reference Rooney and Man U rather than England, as clearly he couldnt threaten to hop over the border and play for the Welsh.
Complain about this comment
221
so you have a few mates working for a bank
if you spoke to them all including myself you would find real anger at the thought of any government legislation trying to prevent the average joe blogs getting their bonus for working hard.
some may prefer a job but fact of the matter is they prefer a good quality job rather than become a tesco shelf stacker .
if my bank stopped paying me a monthly bonus id leave and so would others and go to work at a bank or somewhere else that pays a monthly bonus.
Complain about this comment
Robert Preston:
I have to agreed, bonuses are necessary part of running a business....
~Dennis Junior~
Complain about this comment
View these comments in RSS