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The case for bonuses

Robert Peston | 18:00 UK time, Monday, 9 February 2009

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.

Comments

Page 1 of 3

  • Comment number 1.

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

  • Comment number 2.

    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.

  • Comment number 3.

    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.

  • Comment number 4.

    plan z
    we're breaking down slow
    slowly but surely

  • Comment number 5.

    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.

  • Comment number 6.

    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

  • Comment number 7.

    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

  • Comment number 8.

    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.

  • Comment number 9.

    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!!

  • Comment number 10.

    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.

  • Comment number 11.

    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.


  • Comment number 12.

    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?

  • Comment number 13.

    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.

  • Comment number 14.

    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?

  • Comment number 15.

    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

  • Comment number 16.

    "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







  • Comment number 17.

    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.

  • Comment number 18.

    #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.

  • Comment number 19.

    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?

  • Comment number 20.

    "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!

  • Comment number 21.

    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.

  • Comment number 22.

    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!!


  • Comment number 23.

    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.





  • Comment number 24.

    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.

  • Comment number 25.

    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

  • Comment number 26.

    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.

  • Comment number 27.

    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

  • Comment number 28.

    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!

  • Comment number 29.

    Why haven't they been fired yet?

  • Comment number 30.

    "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.

  • Comment number 31.

    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.

  • Comment number 32.

    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.

  • Comment number 33.

    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.

  • Comment number 34.

    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?

  • Comment number 35.

    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!

  • Comment number 36.

    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?

  • Comment number 37.

    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

  • Comment number 38.

    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.

  • Comment number 39.

    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!

  • Comment number 40.

    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.

  • Comment number 41.

    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!

  • Comment number 42.

    PURGE THE PARASITES CLEAN OUT THE

    BOARD ROOMS AND SENIOR MANAGEMENT.

    CAP LISTED PLC PAY AT 75K max.

  • Comment number 43.

    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!

  • Comment number 44.

    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 .


  • Comment number 45.

    " 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.

  • Comment number 46.

    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'.

  • Comment number 47.

    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!

  • Comment number 48.

    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...

  • Comment number 49.

    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.

  • Comment number 50.

    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.

  • Comment number 51.

    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%.

  • Comment number 52.

    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

  • Comment number 53.

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

  • Comment number 54.

    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 !

  • Comment number 55.

    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......?

  • Comment number 56.

    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 ...

  • Comment number 57.

    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.

  • Comment number 58.

    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.

  • Comment number 59.

    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).

  • Comment number 60.

    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.

  • Comment number 61.

    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!

  • Comment number 62.

    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.

  • Comment number 63.

    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.

  • Comment number 64.

    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 )?



  • Comment number 65.

    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!

  • Comment number 66.

    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.

  • Comment number 67.

    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....

  • Comment number 68.

    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.

  • Comment number 69.

    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.

  • Comment number 70.

    It's all very well for Brown to be "angry" about this but what on earth is he actually going to do?

  • Comment number 71.

    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.

  • Comment number 72.

    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.



  • Comment number 73.

    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

  • Comment number 74.

    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.

  • Comment number 75.

    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


  • Comment number 76.

    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!

  • Comment number 77.

    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/

  • Comment number 78.

    And it's goodnight from him.

    http://news.bbc.co.uk/2/hi/uk_news/politics/7880189.stm

    Goodnight

  • Comment number 79.

    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?

  • Comment number 80.

    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.

  • Comment number 81.

    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

  • Comment number 82.

    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.

  • Comment number 83.

    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?

  • Comment number 84.

    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!

  • Comment number 85.

    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......?

  • Comment number 86.

    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.

  • Comment number 87.

    '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.

  • Comment number 88.

    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...

  • Comment number 89.

    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.

  • Comment number 90.

    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.

  • Comment number 91.

    #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.

  • Comment number 92.

    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.

  • Comment number 93.

    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.

  • Comment number 94.

    #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".

  • Comment number 95.

    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.

  • Comment number 96.

    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.

  • Comment number 97.

    #6

    Ant and dec get 50 million!

    Is that true?

  • Comment number 98.

    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?

  • Comment number 99.

    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?

  • Comment number 100.

    #69

    The smart bank was given enough rope to hang himself all on his won.

 

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