BBC BLOGS - Peston's Picks
« Previous | Main | Next »

Diamond: 'I am compelled to pay big bonuses'

Robert Peston | 15:05 UK time, Tuesday, 11 January 2011

First of all, an apology to those who follow me on Twitter: I had a bad case of Twittarrhoea while I watched the theatre of Treasury Select Committee versus Bob Diamond this morning.

In order to see this content you need to have both Javascript enabled and Flash installed. Visit BBC Webwise for full instructions. If you're reading via RSS, you'll need to visit the blog to access this content.


My enthusiasm did not stem from any huge news divulged by Diamond - but it was gripping theatre.

Probably for most of the audience the best moment was when - on the second time of asking by the Labour MP John Mann - the UK's best-paid top banker said he was still stuck on why it was harder for a camel to pass through the eye of a needle than for a rich banker to enter the Kingdom of Heaven.

Which didn't reveal anything, other than the breadth of the gulf between those who run our biggest banks and legislators.

What should have perhaps disturbed Mr Diamond - who performed with good humour and some aplomb - is that not a single MP on a committee with a Tory majority chose to defend Barclays or give the benefit of the doubt to bonus-paying banks.

They listened when Mr Diamond explained why Barclays is - in his view - compelled to pay billions of pounds in bonuses. But none hinted any kind of approval.

Mr Diamond's case is pretty simple: he wants us all to take great pride that a British bank, Barclays, has created a world-class investment bank, Barclays Capital; and the price of that success is that Barclays has to pay billions of pounds in bonuses to retain and recruit talent for Barclays Capital.

We might not like it. He might not like it. But - and he said this several times - he cannot pay significantly less to his investment bankers and sustain the success of the bank.

For what it's worth, no MP endorsed this view, but nor did they seriously challenge it.

Perhaps the most telling exchanges were on the issue of bonus disclosure.

Mr Diamond said that Barclays did not wish to unilaterally disclose more detail about how much it pays individuals than its competitors.

Had Barclays bigger shareholders requested such information, so that they can form a judgement on whether Barclays is deploying their resources as efficiently as possible?

Mr Diamond said they had not.

Which meant, according to Andrew Tyrie, the Tory chairman of the committee, that shareholders are "half asleep".

If shareholders have been nodding off, perhaps they will have been roused from slumber by something Mr Diamond omitted to say.

He conceded, as he must, that Barclays was forced to eliminate and slash the dividends it pays to the owners following the 2008 crash.

Was there an apology from Mr Diamond for the diet of gruel foisted on investors, while Barclays investment bankers continue to pocket billions in bonuses? There was not.

And, perhaps more strikingly, Mr Diamond also rejected what the Basel Committee and Bank of England would argue, namely that the bank has some discretion in deciding how much to reward staff and how much to remunerate the shareholders.

The trade off between bonuses and dividends is illusory, according to Mr Diamond. The implication is that without big bonuses, there would be no dividends.

But here's the thing. Even with big bonuses, the return on equity likely to be earned by big banks such as Barclays over the coming few years will be stuck at between 4 and 6%, Mr Diamond said, compared with a long run average or around 12% - which will make it extremely hard for Barclays to cover its cost of capital.

In fact the return will be lower still if the Financial Services Authority has its way and forces Globally Significant Financial Institutions - such as Barclays - to raise substantially more equity relative to their loans and investments than the new Basel minimum (which is why Mr Diamond is desperately keen for the FSA to be defeated on this).

Which poses something of a problem for investors and - by extension - for big banks like Barclays.

If investors come to believe that the only reason for supplying that capital is to enable Mr Diamond's investment bankers to generate huge bonuses for themselves - with little left over for dividends - the rational thing for investors to do is to ask for their money back.

Although Mr Diamond may say that slashing bonuses would harm the bank and its owners, he has some work to do to prove that paying those bonuses benefits anyone much but the recipients.

PS I'm not sure Mr Diamond did himself any favours in refusing an invitation from the Tory MP David Ruffley to say he is grateful to British taxpayers for a subsidy which the Bank of England estimates at £100bn for all our big banks in 2009 (see my post How to curb bonuses).

Comments

Page 1 of 3

  • Comment number 1.

    Why does the Govt believe it needs sterling tax revenues from the banks?
    If ithey were paying taxes in dollars or yen, I could understand the impotence.

  • Comment number 2.

    Er, can we really expect politicians to get heavy with the banks when for decades a lucrative clutch of investment bank directorships has been the traditional expectation of many senior parliamentarians once past their best?

  • Comment number 3.

    The banks very nearly destroyed the country. Mr. Diamond wants us to forget this - even before he and his banking buddies pay back the gigantic sums of money we have given them directly, as a result of the insanely low interest rates and QE.

    He is a funny man isn't he? If I went to Barclays for a loan and said what he said to us today he would throw me out and we should do the same to all of his kind!

  • Comment number 4.

    "Mr Diamond's case is pretty simple: he wants us all to take great pride that a British bank, Barclays, has created a world-class investment bank, Barclays Capital"

    Yes, but the real quesiton is, how and from where do they make their profits?

    If some guy was going out each night and robbing houses on the other side of town his neighbours might be willing to turn a blind eye, especially if he was spending some of his ill-gotten gains in the local shops. If, however, he was robbing his own neighbours I doubt they'd be quite so forgiving - in fact some kind of public lynching would probably occur.

    So, we need to ask ourselves whether Barclays and their ilk are the first guy or the second? Or to put it another way, if they are paying bonuses on the back of robbing houses on the other side of town we can perhaps calm down a bit and just enjoy the taxes. But if they are funding these massive remuneration packages by metaphorically nicking my DVD player while I'm asleep upstairs then I have to ask - when are the lynchings going to start?

  • Comment number 5.

    For all the reams and reams of vitriol and borderline incitement to violence on this subject I have read on this blog, I have yet to read a reasonable argument as to why the Government should have any input into levels of staff pay within non-Government owned organisations like Barclays, HSBC and others. There is a very good argument as to why they should, but I haven’t read it yet. Regrettably, all I have read is a lot of the usual “eat the rich” jealousy and misinformed ranting.

    Without wishing to sound like a broken record the bonuses issue is yesterday’s battle. As noted in Robert’s blog, bank’s are doomed to lower levels of profitability, they can’t fund anywhere near the current size of their balance sheets and will inevitably have to shrink over time – which bluntly means more people chasing fewer jobs in the industry. That doesn’t change the fact that the size of current bonuses being handed out to certain individuals is not immoral, its just that I would prefer the problem dealt with naturally – which for reasons noted above, it will be.

  • Comment number 6.

    It is quite pathetic that MPs are so scared of their own backsides that they can't bring themselves to recognise the value of our financial services to the economy. The Treasury Select Committee should be ashamed of itself for not supporting this major contributor to the cost of hospitals and schools. Make no mistake, there are hundreds of huge financial institutions in the City employing hundreds of thousands of taxpaying professionals who will leave if regulation on pay strangles their bosses to attract the best staff. Our world class financial services industry - which the Germans and US would give their eye teeth for - earns this country £44bln in net exports annually. I challenge anyone - anyone at all, to say from where that sort of income can be replaced. Remember, bonuses are now (rightly) paid in shares not cash, so the beneficiary is at risk on the share price performance. As Digby Jones says stop whingeing and support a winning side.

  • Comment number 7.

    If banks are benefiting from very large implicit state guarantees, why are governments not cooperating to impose an appropriate charge for the guarantees? This would raise enormous amounts of revenue for governments, while enabling banks to calculate the true value of bankers' services.

  • Comment number 8.

    I feel let down by the select committee and its short-term, small-minded questions.

    Questions they should have asked but didn't...

    1. Given his views on bail outs does he therefore think that the UK government was wrong to bail out the banks? (if so, I'd be really interested to hear why as it would fly in the face of received opinion)

    2. Does he not think that given the impact banks have on the rest of the economy (unlike other businesses) they do require different treatment in terms of regulation?

    3. If Barclays had bought ANB AMRO at the price it offered what would have happened? And aren't they just lucky rather than clever to be where they are?

    4. Leaving aside the issue of offering competitive salaries to attract the best talent, does he think that what bankers give society is worth the wages they attract?

    5. If not, what are his ideas about how the system can be restructured globally to ensure they get fairer wages?

    6. I'd also be really interested to get his views about what impact it has on our community/society to have such a small slice of it being paid such disproportionate amonts of money?

  • Comment number 9.

    This is plain and simple about jealousy of bankers and rabble rousing.

    This is a fake controversy encouraged by politicians. There is no link between the traditional (well paid) areas of investment banking* and the financial crisis that you in the UK are suffering. None.

    That's not to say bankers aren't overpaid (they are), but there is no conspiracy here at all. Banking is completely transparent and anyone who has been a top performer at a top global university can apply to work in banking. There are real conspiracies in the business world, but this is not one of them.

    What's very telling is the number of "blogs" this article generates. There are real stories, real journalists covering highly important issues which don't see any blogs on the bbc website. Why? Jealousy.

    * advising companies, financing them, most areas of trading. The UK financial crisis was not caused by investment banking, it related to mortgage lending, RBS' acquisition of ABN and other areas.

  • Comment number 10.

    Last year Douglas Carswell MP & Steve Baker MP introduced a private members bill on banking reform.

    Largely unreported in the mainstream media it identifies the primary problems and proposes a solution.

    The bonus issue is mainly a distraction.

    For anyone out there that doesn’t understand how it the banking system works and the price you have to pay (inflation) there are two links below:

    A short animated film by Paul Grignon, ‘Money as Debt’ (link below).
    http://video.google.com/videoplay?docid=-2550156453790090544

    A group wishing to change the system (link below):
    http://www.positivemoney.org.uk/

    And those paying the highest price are:

    Average weekly earnings private sector (not seasonally adjusted):
    Jan 2009 Average weekly earnings = £445
    Oct 2010 Average weekly earnings = £435 (provisional)
    Decrease = – 2.3%

    Retail price index (all items) RP02:
    Jan 2009 210.1
    Nov 2010 226.8
    Price inflation = + 7.95%

  • Comment number 11.

    As long as the other banks pay big bonuses, then he is correct - Barclays must do the same or the best staff will leave.

    However the nub of the issue is that in a properly functioning free market no banks would be paying big bonuses - just as in any other business.

    The government must step in and ensure free and fair competition for banking takes place, so that banks that try to pay big bonuses will be undercut by rivals that do not.

  • Comment number 12.

    I have to agree with Bob Diamond on most of that. If Barclays cuts its remuneration, people will go somewhere else.

    The problem is that the public think that bonuses are there to reward success, whereas in fact the investment banks use them as general remuneration. The difference is that a banker would always be paid some bonus even if unsuccessful, because the bonus IS their remuneration. It would only be withdrawn entirely if they personally did something dreadful, or were fired.

    Secondly, most divisions in banks weren't linked to the CDO nonsense, and it's hard to say that the staff there don't deserve their bonuses. So Barclays is perfectly within its rights to pay the bonuses that it does.

    So that's the sane take on things. Talk of lynchings is ludicrous - not because they're entirely impossible, but because to start lynching over something like this is ludicrous.

  • Comment number 13.

    Many people including students want to work in banking, they just don't want to work in the UK.

    I hired someone from the UK who was working at a much better paid job at a hedge fund but wanted to work in a bank (still well paid, but less pay than the hedge fund; but more interesting, he felt).

    The primary condition to accepting was that he would not work in the UK given the fake conspiracy theories and public jealousy prevalent here.

    This is a counterproductive and fake controversy.

  • Comment number 14.

    We, the taxpayer, watch players (banks) play cards with each other. The players know that if any one of them loses all its money the taxpayer will bail it out. So, on they play. When one of them wins a large amount others are bankrupted, it is a zero sum game. The winner (Barclays) claims the others are weak and ineffective and should fail. The winner claims it needed no help, so it owes no debt to us, the taxpayer.

    The problem is that we, the taxpayers, underwrite the whole game. Who wins and who loses is irrelevant because we, the taxpayer, need the utility element of banks, we will always, under the current system, bail out the loser.

    Before Mr Diamond lectures anyone, or smugly publicly justifies his almost sociopathic arrogance, let us consider how much Barclays was willing to pay for ABN. Barclays would have been the bail out recipient if it hadn't been for RBS. This is how it is. We would have bailed out whoever it was.

    As it is Barclays has not had to write down money owed to it by bailed out banks.

    Mr Diamond at least has the value of showing us, the underwriters of the card game, that he gives not a whit for the fact that his "success" is bacause we were the bankers who stumped up when the other card players were bust.

    Yes, Mr Diamond, we should have let the other banks fail ... and had we done so your shareholders would have been wiped out and your profits properly and fairly decimated.

    Mr Diamond is right about letting banks fail: the corollary is that banking should be organised so we, the taxpayer, can let banks fail - so that means Glass Steagall separation and not being too big to fail.

    Thank you Mr Diamond. You have done us a service.





  • Comment number 15.

    davidbrent - what makes you think they make their profits from stealing anyone's DVD players (metaphorically)? I thought they made their profit from lending money, providing M&A advice, investing in public markets etc.? Nothing particularly criminal about what they do in general.

  • Comment number 16.

    Since he took over the reins of BZW, Bob Diamond has done more good for the UK than virtually any other individual of whom I can think. He has built almost from scratch a world class investment banking operation in the face of fierce competition from Wall Street and deeply personal and entirely misinformed popular vitriol at home. The pyrrhic side of me half wishes that, Galt-like, Bob and the other leading City figures decide in concert to relocate their operations en mass to more appreciative climes - if only to teach a lesson to the shouty moochers who dominate the popular debate. However, my overwhelming feeling watching Bob's testimony earlier was intense pride. Pride that, in spite of the best efforts of politicians, journalists and trade union leaders alike to tear down our one truly great industry, London will remain for the foreseeable future the gold standard of the financial services sector.

  • Comment number 17.

    > I'm not sure Mr Diamond did himself any favours in refusing
    > an invitation from the Tory MP David Ruffley to say he is
    > grateful to British taxpayers for a subsidy which the Bank of
    > England estimates at £100bn

    We get that class of person here, as well. Glad to accept our bonuses, yet truculent when asked to say thankyou.

  • Comment number 18.

    Please can anyone make an informed estimate of how much Barclays dividend would be lifted if all the bonus money was added to it?

  • Comment number 19.

    #. At 16:01pm on 11th Jan 2011, a_sensible_comment wrote:
    "...........Regrettably, all I have read is a lot of the usual “eat the rich” jealousy and misinformed ranting............"

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

    Damn, someone has beaten me to a Motorhead reference. Well, with all this Overkill I guess we either March or Die, alternatively we can all just Get back in Line.

    :-))

  • Comment number 20.

    From an FTs lex column today

    http://www.ft.com/cms/s/3/9791d5e0-1cdb-11e0-8c86-00144feab49a.html

    "Two years on, and little has changed. Total investment bank bonus allocations are set to be lower than last year, but the will to pay remains strong: the banks are setting aside a higher share of falling revenues. For Goldman Sachs, Barclays Capital and Credit Suisse, pay is expected to amount to 40-50 per cent of net revenue, up from 36-42 per cent."

    Pay is 40 to 50% of net revenue - up from previous years! - no other business pays such a high proportion of revenues out to staff - if Tescos did this they would be paying six figures to all of their staff.

    The pay of the investment banks is set as if they were partnerships. But that fact is they aren't - if it goes wrong we have to carry the can!

    Sadly the good pay and conditions doesn't stretch to the majority of staff who work at the retail bank. They have had their final salary pension scrapped.

  • Comment number 21.

    To put this greedy gits comments into perspective the highest paid civil servants take a bonus of £15K if and only if they over perform on all their targets and their departments meet all their targets. Even then the bonus pot has been built up over years from restricting basic pay increases. It is a means of the government withholding basic pay increases to ensure performance.

    Investment banks performance related pay arrangements are nothing like this. The money allocated to bonsues is not really contingent on anything or dirven by perfromance. It is essentailly a diversion of funds that could be used to lower charges to customers or to pay dividends into the hands of it grasping employees.

    There is no need for investment bankres to have bonuses. If "top" (by which I mean most greedy and irresponsble) traders won't get out of bed for less that £10Million, there will always be other people, just as "talented" that will.

    Diamond is saying these ridiculous things to establish his own case for ridiculous pay levels.

    The public will not stand for this and on 29th Jan and later in March I would expect trouble over this.

  • Comment number 22.

    "Why does the Govt believe it needs sterling tax revenues from the banks"

    Because the economists advising the ministers believe that. And that applies as much to the Labour party as it does to the Tory party.

    It would be interesting to see how many economists are retained by the large companies and banks to push the current economic model as though it were the only description of the truth.

    Clearly the government only needs to tax to control inflation. It may also need to levy charges to resolve externalities. However the 'budget constraint' is vital for large companies and banks so that they can stop government controlling the amount of real output ends up in their coffers.

  • Comment number 23.

    What industry are investment banks competing with for 'talent'? Unless Manchester City are threatening to sign the chap who trades Credit Default Swaps or the guy who persuades a CEO to overpay for another company, then there is no other industry that pays these wages!

  • Comment number 24.

    There are a couple of points within Robert's blog

    If investors are not receiving sufficient returns on their investments the rationale response is to dump the investment. This is not controversial and leaves Bob Diamond with the difficult choice: if he wants to keep share price high (necessary for share options) then bonus need to be cut, if he wants to maximise bonuses then becuase they are paid in shares they may be subject to share rice falls.


    the MPs were stupid. Do they not realise that the whole thrust of Companies legislation in the UK is that the setting of salaries is a matter for management not shareholders

  • Comment number 25.

    An earlier commentator talks about consipracies in banking. It would I suspect be instructive to investigate who owns the routers and fibre cables conecting the major trading exchanges.

    With two thirds of trades being computerised automated high speed operations, what would be the advantage to the infrastructure owners of a tiny bit of lag providing information to competitors every now and again?

  • Comment number 26.

    If their supersize bonusus bother you that much then you have a choice, either join them and be a banker or take your money out of banks and spend it. It's not earning anything for you but it is for these sad super rich people who can't be called what we all know they are because they are protected by left wing human rights ladies.

  • Comment number 27.

    post 17, Mr Cartier. Keep up your blogging, it won't make any difference.

    Gordon Brown and Alasdair Darling caused RBS to pay out billions in bonuses, which they could have prevented with the UK gov't controlling the company. Why didn't they? It's not because of some conspiracy, they paid the bonuses because it made commercial logic. They knew there's no link with the RBS investment bank and the financial crisis.

    Why don't you write some blogs about real issues? Didn't see anyone here blogging when Salman Taseer was murdered in Pakistan. You lot need to get a life..

  • Comment number 28.

    For banks that require no support from the taxpayer there is little to be said other than what controls the market for these etra - terrestrial beings that have such a rare skill and for which there is no possibility of skill transference? There must be many graduates who would fall over themselves to do the job at one tenth the bonus that some of these people receive. Is there no scope for skill transference to a larger number of bank staff to bring down the cost? In addition for those banks that are dependent on taxpayer support the government has a duty to ensure there is a proper balance between the stability of the banks, the interests of shareholders (including itself) and any validated risks of controlling bonuses to a more reasonable level. What I did not hear is Mr Diamond talking in terms of his fiduciary duty in the context of weakening the financial position of the banks by paying stupendous remuneration and doing nothing to manage a way out.

  • Comment number 29.

    Talk of lnching is not ridiculous. Millions of people are very very angry. They have lost their jobs, their savings and their livelyhoods because of these gits.

    No convictions, no apologies, smugness and a return to "business as usual" are very dumb responses form the bankers when the whole indutry still owes the taxpayers over £100Bn in direct subsidies. Money that entitles the Coalition Government to cut a third of public sector workers jobs, increase pension contributions and reduce their value, freeze pay for two and in some cases three years, increase VAT to 20%, treble tuition fees for students and slash benefits and services that people rely on. All of these cuts adding up to less than the existing liability from bail outs on the National Accounts.

    Worse still there has been no proper reform to prevent this happening again and the message to bankers is do even riskier things. Nothing bad will happen to you. There has been no seperation of retail and investment banking, no Tobin or transaction taxes. Nothing.

    People are very very angry and there will be trouble.

  • Comment number 30.

    I see the banking fraternity are out inforce again. They are now quoting 44BN, Perhaps it increases proportional to the increase in fear.

    Make a stand and keep the pressure on. They have not only **** on us, they have rubbed it in and now they have spat on it to make it go further.

  • Comment number 31.

    @ 27. At 16:38pm on 11th Jan 2011, JC_banker wrote:

    > post 17, Mr Cartier. Keep up your blogging, it won't
    > make any difference.

    Thanks for your permission (which I don't need). No difference? Maybe, maybe not. Maybe it's costing bankers. Maybe they don't like it? Maybe you don't like it? Good.

  • Comment number 32.

    It's late afternoon, all the plebian slaves have now finished for the day - QUICK! to the blog, we must defend our masters or they shall be angry....

    Diamond: 'I am compelled to pay big bonuses'

    Junkie: 'I am compelled to rob houses to feed my habit'

    "PS I'm not sure Mr Diamond did himself any favours in refusing an invitation from the Tory MP David Ruffley to say he is grateful to British taxpayers for a subsidy which the Bank of England estimates at £100bn for all our big banks in 2009"

    He's laughing at the plebian slaves again - what a shame they're too thick to see the subtle two fingers old uncle Bob is sending to you.

  • Comment number 33.

    I think the issue of bonuses is easily solved. Rather than pay them out yearly they cannot be collected before, lets say, 10 years. If the performance of the individual (and their actions for that year) have proven to be sound then they can collect their bonus. During that 10 years the fund that collects the bonuses can be invested by the company to try and increase the investment and the bonuses will be greater (hopefully!) with good investments. This would mitigate some of the worst effects of short-termism, especially the fraudulent actions that are designed to pump up a bonus for that year but are not good for the company in the long-term.

  • Comment number 34.

    At the heart of the argument is that bonuses are needed to motivate the best performers. The science is surprising. Bonuses and incentives seem to lead to better performance when the tasks are mechanical and demand no judgement. When they are complex and require judgement, bonuses tends to lead to poorer performance.

    If you want to check this out look at youtube with this suffix /watch?v=QQPCbXVXQWI. This is Dan Pinks ten minute outline on the latest research on motivation.

    This is not a case of envy or even socialism. There is no basis in fact that high earnings lead to higher performance!

    So, we know it makes no sense scientifically. Yet we allow the bankers to get away with having such high earnings whilst we bear the moral hazard. This is crazy!

    If these high-performers were to go to Dubai, let them. Let the Dubai Government bear the risk of the next bail-out!

  • Comment number 35.

    24. At 16:37pm on 11th Jan 2011, Justin150 wrote:

    > The MPs were stupid. Do they not realise that the
    > whole thrust of Companies legislation in the UK is that
    > the setting of salaries is a matter for management not
    > shareholders

    We ARE the flippin' shareholders, you chump!

  • Comment number 36.

    We own 2 state banks RBS & Lloyds.
    If the boards are not listening to us then we sack and replace them.

    If the non-state owned banks are not listening then we take away their UK bank membership. No licence to take sterling deposits or to create sterling loans/deposits and no interest to be paid on their reserves.

    They will get the message pretty quickly.

    Come on politicians Stand up for god's sake!

  • Comment number 37.

    @11 posted: "As long as the other banks pay big bonuses, then he is correct - Barclays must do the same or the best staff will leave.

    However the nub of the issue is that in a properly functioning free market no banks would be paying big bonuses - just as in any other business."

    I think this is the point. It boils own to the banks being held to ransom by the "talent". Is the industry so bereft of talented bankers the under-supply is driving the cost up?

    If any other industry was held to ransom in this way there would be an outcry and calls for the greedy to stand aside and let other equally talented have the jobs for less money.

    Or is it that in reality as you say there is no properly functioning free market when it comes to bankers wages?

  • Comment number 38.

    Did anyone pick up on the 'lie' told by Nick Clegg yesterday?

    The coalition have dropped Labours bonus tax - which was reported to bring in £3bn last year.
    Instead he was singing the praises of the 'much increased' tax take from the new transaction tax (oh BTW, future and current pensioners - you'll be picking up that one) which he quoted as being a whopping £10Bn.

    Impressive stuff you might think, except Labour's tax brought £3bn in 1 year when bonuses were subdued - the coalition tax is over the life of Parliament - which I believe is about 5 years.

    You do the maths (which will unfortunately rule out the people who defend banks) and you will see the new tax is a con. Not only does it raise less, but it's taxing the movement of money by those who move it - bonuses will be largely unaffected.

    It's yet another regressive tax from a regressive Government - and credit to Nick - he's now lying like a true Tory - without shame.

  • Comment number 39.

    35. At 16:58pm on 11th Jan 2011, Jacques Cartier wrote:

    > We ARE the flippin' shareholders, you chump!

    Interesting - you hold shares in Barclays, Goldman Sachs, Citi, Credit Suisse, Deutsche bank, JP Morgan, Morgan Stanley, UBS, Bank of America Merrill Lynch, BNP Paribas, Jefferies, HSBC, SocGen and Macquarie do you?

    After all, those are the major investment banks with substantial headcount in the City - you know, the ones paying out the substantial variable remuneration you object to.

    Or is it possible you have absolutely no idea what you are talking about..?

  • Comment number 40.

    8. At 16:08pm on 11th Jan 2011, Alexander wrote:

    "3. If Barclays had bought ANB AMRO at the price it offered what would have happened? And aren't they just lucky rather than clever to be where they are?"

    Aw - don't shatter the dream for the bankers, they've already told everyone else it was down to their 'cleverness' - they will be hurt if you tell them it was just luck.

    We'll see how lucky Barclays are as the EU nations keep toppling, if they pull out, they directly cause the collapse, if they stay in - they're going to get burnt.

    Now do the shareholders know this? - or are they all clueless gamblers about to get fleeced?

  • Comment number 41.

    What's so galling for the proletariat, is that the government decides to raise a tax on short term wholesale borrowing by the banks, to try and encourage them to reduce short term wholesale borrowing. But then the banks (who are paying a neglible rate of interest to their long term savers) will just delay the return of decent saving rates to us proles because they are paying these extra taxes.

    The bonuses don't change, (no extra tax disincentives for them) but the savers suffer more for longer. Isn't it about time that the proletariat pensioners and savers have some-one fighting their corner in these committee meetings? Higher inflation, tax on savings income, means we are going backwards faster than ever!

  • Comment number 42.

    If I remember correctly from a Uni essay Adam Smith stated that free markets will sometimes become irrational and at that point government must step in...

    The scale at which investment banks can operate means vast sums of money are intermediated, with investment banks taking a fee for the service. A crucial part of how our economies work. Because the sums of money are so vast, investment banks taking a small percentage and then staff taking a percentage of those revenues as bonuses, means the headline amounts we read are still obscene.

    Financial 'innovation' has allowed banks to operate at this scale. Some of this innovation has been good, some of it has been bad. The bad aspects have wiped out a lot of the value and goodwill created by the good innovation.

    Back to my point on broken free markets.. the government should step in and force the fees charged by investment banks down. That would reduce the huge profits - banks do not need to earn 20% return on equity to attract capital.

  • Comment number 43.

    At the end of the day, banks are businesses and the more the government stays out of their way the more successful they will become. We all want banks to return to normal banking and for the crisis to be over, so leave the banks alone, don't overtax them and let things return to normal.

    Government interference and carping from anti-bankers will do this country no good at all.

    Incidentally, Barclays has done rather well during this crisis and looks set fair to reap the rewards when things return to normal.

    By the way, we don't own the banks, their shareholders do. And all the politicians are left with is looking tough knowing there is nothing they can do about bonuses unless they want to risk killing the goose that lays so many golden eggs, and not even the government is that stupid.

    Diamond is right, time to move on and get over it!

  • Comment number 44.

    It is interesting to see that some companies do value thier staff!!!! But seriously it is interesting that there is something in Resource Based Theory about appropriation.

    Neverhtheless from where does the power to appropriate come? Is there a shortage of banking talent (if so why not solve the supply), or are there only a limited number of roles available in a stongly networked industry and the roles move with the people (if so solve the structure)?

    However yukky the size of bonuses seem I would rather not see the boat rocked now whilst we need banking taxes, but I would like to see a strong analysis of why some within the banking sector can appropriate so much - why does the banking sector have Roonies?

  • Comment number 45.

    What about hairdressers? They're the real spivs. They cut YOUR hair for money. If you ask for a mullet and they give you a mullet, you have a mullet! This is their fault for giving you what you requested despite knowing that you couldn't pull the look off (as no one can).

    I'm sick of these parasites. They do nothing for society and so should be taxed at 1 billion percent. This would pay off the deficit immediately.

    We have lived as humans without hairdressers for much longer than we have with so clearly we should outlaw their "profession". It's easy to be a hairdresser, anyone can do it so if they threaten to leave the country there will be millions willign to fill their place and earn easy money. Hairdressers exhibit pure greed as their fees are only based on a Greed Index - they should cut it for a pound or even for free if they were like everyone else.

    Worse still, if you have hair extensions they sell YOUR hair back to you at great expense.

    Let's get rid of these spivs! Come on hairdressers, name one thing, just one thing that you do for society?

  • Comment number 46.

    31. At 16:52pm on 11th Jan 2011, Jacques Cartier wrote:

    "Thanks for your permission (which I don't need). No difference? Maybe, maybe not. Maybe it's costing bankers. Maybe they don't like it? Maybe you don't like it? Good."

    Jacques - if it wasn't making a difference then there wouldn't be anyone on this blog using 'bank' in their name trying to defend the banks. I mean surely they would all be busy making money rather than picking a fight with someone they do not fear.

    Trust me - they are very scared in the city - the clowns on here who defend the banks don't have a clue what the feeling here is really like - because none of them seem to work in finance on closer inspection of their blogging.

    On the bright side you're improving the economy Jacques - we have hired 2 new security guards in this building recently - that's employment created from your "reams of vitriol and borderline incitement to violence"

    ...so when does the violence start?

    What the bank suckers don't realise is this is merely the warm up - the opportunity for banks to set things right before they are all burnt to the ground - seems like Bob has declined the opportunity - which of course won't be forgotten.

  • Comment number 47.

    I don't want some patronising, meaningless "thank you' from the likes of Diamond and his ilk. I don't envy these lowlife. I'm relieved not to be one of them. Let them choke on their caviar. In answer to the whinging bankers and their apologists here, I shamelessly reproduce the following outstanding contribution copied from Robert Peston's blog of Monday 10 Jan 2011:

    "60. At 18:18pm on 10th Jan 2011, FauxGeordie wrote:
    @31. At 16:55pm on 10th Jan 2011, kalokagathia wrote:

    To those who seem to have missed the point - this post is from someone who thinks they have hilariously exposed the logical fallacy at the root of all banker bashing.

    These sort of posts crop up on here quite often from infrequent banker apologist posters who read the blog with growing irritation/alarm and decide to put things right with a few well chosen words - they never meet any ordinary people who aren't employees so they never get given the correct Anglo Saxon tinged response.

    Briefly summarised - we dug you out of a mess entirely of your own making with our money. Hundreds of thousands are losing their jobs and the means to dig the country out of this hole - useful manufacturing with UK owned IP and financial control - has been wrecked by decades of violent asset stripping by the UK financial services industry using ever more bizarre, tax efficient and incomprehensible/unregulated financial instruments.

    If you create wealth for the country - rather than soak it up, skim it off, and ship it out of our reach - why are we still waiting three years later? If the UK government had given say a shipyard a tiny fraction of the money you've got - and which you won't be able to repay - you would have been apoplectic with rage.

    You aren't part of the problem you ARE the problem, you and your comprehensively bought and sold politician clients

    The housing bubble you used to blind the population has gone, and there is nothing else left to sell. You didn't know what you were doing. Give us our money back. We'll have it directly thanks rather than take the chance that you make the mistake of allowing a tiny proportion of it to trickle back down to the rest of us in taxes on bonuses and profits."

  • Comment number 48.

    Whilst I feel that the level of bonusses paid to bankers is out of control, I'm fairly certain that every moaner on this blog would grab one with both hands if offered.

    I'm afraid our immediate problems are much deeper than this issue.

    Worry about what needs to be worried about.

  • Comment number 49.

    1) Again we hear that the banks are forced to pay huge bonuses in order to recruit and retain "the brightest and the best" or words to that effect. Is this true? It's not my experience that bankers are brighter than many other people who earn an awful lot less, and they're certainly not "better", not intellectually, not morally, not in any way at all. It's hard to prove either way which is why this is the argument bankers like to use. When they can prove that they are so much brighter and better than the rest of us as to justify their ridiculous compensation packages then I'll shut up. Meanwhile we should pay them what they deserve. Not much.

  • Comment number 50.

    Mr Peston you posed a question in your previous blog along the lines of : is Mr DIAMOND WORTH THE WONGA ?

    You attended the TSC meeting and twittered. I did not follow your Twitter as I was on a train at the time catching up with unread newspapers. Now tell us Mr P if in your view Mr D is worth the wonga.

    I am a retail shareholder in Barclays. Poor dividends mean NO HEATING for me this Winter. If anyone thinks that addressing questions to the Investor Relations Dept. gives any real answers you may as well whistle at the moon. Their AGMs are equally laughable stich-ups.


    Another Bank I have challenged in the past (2004-2008), apart from Barclays, is RBS. I must have put forty or fifty well contructed questions to the then Manager of the Investor Relations Dept.

    A handful of inquiries were answered reasonably...the rest were in substance avoided by saying such information is not in the Public Domain etc etc. It was small minded and petty the general response. An avoidance of the truth because it suited those in powerful positions within the bank so to do.

    As to Institutional Investors and their so-called Meetings with RBS the descriptions given to me by the IR Dept of the then RBS was chillingly lightweight. An hour or two of pleasant politicking, usually at HQ, followed by little conclusive. But hey, why should the Instituional Investors focus more intelligently ? A few sheets of A4 handed to them is eqivalent to the best after party jaboree bag for which one could wish.

    Shareholder Democracy does not rule, OK ?

    It should, but it does not.

  • Comment number 51.

    Heres an intresting thought. MP's have had a real cut in income because of the tightening up of expensives and yet there are still plenty of people who want to be MP's

    What we are assuming is that if we reduce the bonus of a top banker there will not be another one who might be better to take their place at a cheeper rate( lets not forget this will still be a large sum of money)

    Lets also not forget that using the current system gave us bankers that got us into this mess in the first place.

    If you and the select committee are saying that shareholders are not picking up their responsibility to regulate this process then in efect we are saying that the capitilist model is flawed and we had better choose a diffrent way of managing the money markets!

    Suggestions please:-

  • Comment number 52.

    To be honest I'm not the slightest bit bothered what Barclay's pay out in bonuses. To my knowledge they did not need to be bailed out by the tax payer and as such I have no interest or right of say in what they pay their staff.

    Those banks who I bailed out as a taxpayer I do have an interest in. Those banks should not be paying ANY bonuses until they are back in profit and back in private hands. If the bankers who work for those companies threaten to leave Britain then let them go - we can not afford liabilities like them.

    I'm fully in agreement with Mr Diamond when he said that the banks who fail should be left to go to the wall and not saved with public money. Liabilities of banks should fall and remain fairly and squarely on the shoulders of the investors and shareholders. They have made a substantial amount of money from banking over the last 2 decades and should have built up enough reserves to invest in their companies when things got tough.

  • Comment number 53.

    2) G J Beale, the CEO of the Nationwide, earned £650,000 in 2009/10 plus a bonus of £231,000 = £881,000 (source Wikipedia). Bob Diamond apparently will be offered £8 million just as a bonus, so if he takes it he will comfortably earn 10 times as much as Beale. If it's true that humungous compensation is needed to recruit the best, then Beale must be useless.

  • Comment number 54.

    Doesn't it worry anyone that all the scientists, chemists, productive workers and most people who have a degree (except an MBA) all think banks are an unstoppable disaster just waiting to happen....

    ...while the defenders are made up of bankers (who still fail to understand the seeds of the crisis - I mean they still call it a 'liquidity crisis' - how thick are they?), and shareholders (who clearly didn't read the small print) and general bottom of the barrel dregs who aspire for a better life - but are far too stupid to realise it's not obtainable (or rather it's about as obtainable as winning the lottery).

    I know which side I'm on - I'll stick with the clever lot thanks, all the dumb dumbs can line up and wait for their disappointment.

    I mean how stupid do you have to be to not understand that a bailout of the financial system is a bailout for all banks and building societies. I'm glad I don't have to meet these people face to face - I find it very hard to hide my disappointment when I meet someone with the brains of an amoeba.

  • Comment number 55.

    Writingonthecubiclewall: give Diamond (aka Jacques) a break. He's a successful banker able to extract more from less and cover his employees with largesse.
    JC_banker from your language it's clear you don't deserve the JC tag. Brave being a banker at the moment but perhaps you need to remember that your customers may some day learn the monkey story.

    Once upon a time, in a village, a man appeared and announced to the villagers that he would buy monkeys for £10 each.

    The villagers, seeing that there were many monkeys around, went out to the forest and started catching them. The man bought thousands at £10.

    And, as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at £20 for a monkey.

    This renewed the efforts of the villagers and they started catching monkeys again.

    Soon the supply diminished even further and people started going back to their farms. The offer increased to £25 each, and the supply of monkeys became so small that it was an effort to even find a monkey, let alone catch it!

    The man now announced that he would buy monkeys at £50! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.

    In the absence of the man, the assistant told the villagers. "Look at all these monkeys in the big cage that the man has collected. I will sell them to you at £35, and when the man returns from the City, you can sell them to him for £50 each."

    The villagers rounded up all their savings and bought all the monkeys. They never saw the man nor his assistant again, only monkeys everywhere!

  • Comment number 56.

    Please forgive this repeat from Bobby's previous blog:

    Bank bonuses are a red halibut. What else is going on? For instance, the reduction in number of high risk businesses and therefore the no doubt certain increase in lending to businesses. http://www.freshbusinessthinking.com/news.php?CID=&NID=7071&Title=Drop+in+High+Risk+Companies+Paves+Way+for+More+Bank+Lending+to+UK+Firms Look out for the politicians claiming that one as something they managed to extract from the banks.

  • Comment number 57.

    42. At 17:17pm on 11th Jan 2011, fletchhero wrote:

    "If I remember correctly from a Uni essay Adam Smith stated that free markets will sometimes become irrational and at that point government must step in..."

    ...at which point they are no longer free - Ergo free markets will never work in a developed nation (they might work in a fledgling nation where anyone can set up a stall and flog tat)

    I think you'll find Adam Smith is alien to the average banker - the focus is all on the instrument - not how it fits into the big picture - that is "someone else's job"

  • Comment number 58.

    3) Why does the Government let them get away with this? Here's why. These big bonuses will be taxed at 50%. The alternative to paying bonuses is that the banks make more money which is liable to corporation tax - at a lower rate than 50%, I believe. And in any case the Banks now have losses from previous years to offset against their taxes. So it's better for the Exchequer for the bonuses to be paid. The ideal for the Government is to let the bonuses be paid then tax them at 100%.

  • Comment number 59.

    My company applied to Barclays for a small loan to expand into China and didn't even get to complete a form. The manger told me point blank to forget it.

    "We aren't lending on anything without assets to back it up."

    So if Barclays want to generate more return they should first of all think about who actually creates wealth: Is it the number crunchers, is it the market manipulators or is it the people who actually create goods, consume materials, add value and increase growth?

    Sooner or later the biggest bubble in history - bankers bonuses will burst. It can't come a minute too soon for most people.

  • Comment number 60.

    4) I don't actually believe that it's fair to introduce a special tax on bankers' bonuses. Why just the bankers? Why not everyone who earns more than x, in basic and/or bonuses? If you introduce a special tax for the financial sector I think you'll find that many banks will redefine themselves as something else. e.g. "Investment Banks" might come clean and admit they are really casinos.

  • Comment number 61.

    #27 JC_banker. Keep drinking the kool aid and hope that man really can live by delusion alone.

    If there is no link between RBS and the financial crisis why were they propped up by the state? Why not just let them fail as capitalist doctrine dictates?

    How can you have a bank with a balance sheet larger than the GDP of its host nation and yet whose failure would pose no threat to the ongoing viability of that nation?

    Salman Taseer has very little direct relevance to the financial crisis or to bank bonuses. That may explain why find so few references to him on this blog. However since you are interested ask how the "AfPak" war is being financed and why it is being waged. Ask why the Taleban were once honored guests in Texas?

    Answer these questions and you may learn something of the real dangers that the financial kleptocracy pose to our ongoing viability.



  • Comment number 62.

    "43. At 17:17pm on 11th Jan 2011, taxpayer2010 wrote:

    At the end of the day, banks are businesses and the more the government stays out of their way the more successful they will become. We all want banks to return to normal banking and for the crisis to be over, so leave the banks alone, don't overtax them and let things return to normal. "

    Are you a goldfish?

  • Comment number 63.

    "We bankers are people who take your money and then invest it - and keep on investing it - until it's all gone."

  • Comment number 64.

    @ 45. At 17:18pm on 11th Jan 2011, Lindsay_from_Hendon wrote:

    What about hairdressers? They're the real spivs. They cut YOUR hair for money. If you ask for a mullet and they give you a mullet, you have a mullet! This is their fault for giving you what you requested despite knowing that you couldn't pull the look off (as no one can).

    I'm sick of these parasites. They do nothing for society and so should be taxed at 1 billion percent. This would pay off the deficit immediately.

    We have lived as humans without hairdressers for much longer than we have with so clearly we should outlaw their "profession". It's easy to be a hairdresser, anyone can do it so if they threaten to leave the country there will be millions willign to fill their place and earn easy money. Hairdressers exhibit pure greed as their fees are only based on a Greed Index - they should cut it for a pound or even for free if they were like everyone else.

    Worse still, if you have hair extensions they sell YOUR hair back to you at great expense.

    Let's get rid of these spivs! Come on hairdressers, name one thing, just one thing that you do for society?

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

    PATHETIC! Is that the best you can do, really? REALLY?

    Last I heard, hairdressers weren't bailed out by hundreds of billions of tax payers money.

    Last I hear, hairdressers didn't lobby governments to remove the regulations that were stopping them committing what should to down as the biggest fraud in history (and then committing the act).

    Your analogy is so weak, it's infuriating. You MUST be a member of the banking industry.

  • Comment number 65.

    @48. At 17:24pm on 11th Jan 2011, thankgodimwelsh wrote:
    Whilst I feel that the level of bonusses paid to bankers is out of control, I'm fairly certain that every moaner on this blog would grab one with both hands if offered.

    I'm afraid our immediate problems are much deeper than this issue.

    Worry about what needs to be worried about.

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

    OMG!?! Are you for real??? Look......if there are people here who would grab a banker sized bonus with both hands what does that say about the obscene imbalances in our society?

    "......immediate problems are much deeper than this issue" i.e. the size of banker bonuses. OK. What problems do you have in mind? The one's that have been directly caused by greedy incompetent bankers? Or the other one's i.e. the one's that have been indirectly caused by greedy incompetent bankers?

    Please. Wake up. Before it really is too late.

  • Comment number 66.

    I have no problem with banks paying whatever bonuses they like..... As long as they dont have any outstanding bail-out loans to the government.

    In short if they want to pay massive bonuses they should pay off their government loans first.

    Even if the Chancellor were to put a scheme in place where for every penny of bonuses paid the banks would have to pay back a penny of their debt to the government it would make a substantial dent in the national deficit

  • Comment number 67.

    Prior to 1979, and for a vast number of years before, the Country achieved its much deserved great reputation from many activities other than Banking. Then we gained a female PM who set about decimating our major manufacturing activities. From then all that then mattered was "market forces", and the filthy lucre took hold, such that finance has romped uncontrollably away; house prices, cost of living, incomes, bonuses, such that all that matters now is Banking and bankers, bankers, bankers. Mrs Thatcher you will never be forgiven ... you put this country back at least fifty years. polishat

  • Comment number 68.

    Lastly) A lot of commentators seem to think that in return for receiving their huge bonuses the bankers ought to make more of an effort to lend money to small businesses etc... The two things are not even connected! It's the gamblers that earn the bonuses while it's the retail bankers who lend the money - as long as the other lot haven't blown it all. As far as I know, people working in retail banking are not generally paid a huge amount, certainly by banking standards. Of course the two things should be split! Then the "investors" who are prepared to let a 16 year old school leaver gamble with their millions would lose it if their was a crash, while the investor putting his hard-earned pennies into a savings account, for a rainy day, would be protected.

  • Comment number 69.

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

  • Comment number 70.

    I have listened carefully to Mr Diamond and his answers to questions posed and that has just reinforced my view. The retail banking sector pay an average salary of £25k and top bonus payments are around £1-2 K. The majority of bonus payment are made to the investment side Barclays Capital - which Shareholders have no sight of.

    Bonus's are not the important factor - the important factor is investment banking and their investors having full responsibility for their risk taking without being underwritten by Central banks and taxpayers if we are not to rerun what has happened in the not too distant future.

    I wonder if the Banking Commission will grasp the nettle - as I don't think this government will and from Bob Diamond's response - Barclays and the other banks won't - why should they. Makes excellent business sense to keep the two arms together, knowing irrespective of what they do they are too big to fail

  • Comment number 71.

    16. At 16:24pm on 11th Jan 2011, kalokagathia wrote:

    > my overwhelming feeling watching Bob's testimony earlier
    > was intense pride.

    What a sycophantic toad we have over here! Look at this one, everybody...

  • Comment number 72.

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

  • Comment number 73.

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

  • Comment number 74.

    65. At 17:54pm on 11th Jan 2011, Duxtungstu wrote:

    OMG!?! Are you for real??? Look......if there are people here who would grab a banker sized bonus with both hands what does that say about the obscene imbalances in our society?

    "......immediate problems are much deeper than this issue" i.e. the size of banker bonuses. OK. What problems do you have in mind? The one's that have been directly caused by greedy incompetent bankers? Or the other one's i.e. the one's that have been indirectly caused by greedy incompetent bankers?

    =================================================

    Yep - I'm for real!!!

    You want problems? - How about collapse of the Euro. Or QE. Or record levels of private and sovereign debt. Or 1.2 million mortgages paid by Credit Card. Or more public attention paid to the relatively trivial issue of bankers bonuses whilst economies sink.

    How do you like them problems?

  • Comment number 75.

    It seems so simplistic to me - if the employees are set targets for profitability of the bank, they would not receive their bonus! Why should I receive reduced interest on my accounts and higher bank charges for a bank to employ someone that is not able to improve the payback on their use of MY money?


  • Comment number 76.

    53. Joe Bicarregui wrote:

    "G J Beale, the CEO of the Nationwide, earned £650,000 in 2009/10 plus a bonus of £231,000 = £881,000 (source Wikipedia). Bob Diamond apparently will be offered £8 million just as a bonus, so if he takes it he will comfortably earn 10 times as much as Beale. If it's true that humungous compensation is needed to recruit the best, then Beale must be useless."


    And just how big is Nationwide compared to Barclays WORLDwide???

    As a Barclays shareholder and account holder, I'm quite happy with the job Bob Diamond is doing. More of the same, please!

  • Comment number 77.

    The point is that Banks are a business set up to create money. Every other business makes money by creating something else. My point is that people who work in a bank appear to make impressive sums of money, because that is how the business is set up. They get training, expertise and experience at doing their job - what few have is a unique talent. They get the bonuses because they happen to be in an industry designed to make money, not because they are special. I can think of no other industry where there are 5000+ people who have unique talents. There are 5000 excellent surgeons, 5000 excellent teachers, 5000 excellent website designers but few of these are really uniquely talented. They make developments because they love their jobs and want to do it even better. They might even hope for some recognition or even a modest bonus, but few would stop just because they get a bonus.

    We can't do without banks and bankers effectively decide how much to pay themselves. The directors are on a merry-go-round. To get a place on it you have to agree to bonuses. We have no say in the matter and with so few banks there is hardly a free market.

    What Bob Diamond seemed to be saying wasn't that they were worth the bonuses, but if we tried to take their football away they would go and play somewhere else. If he can't see that that is unacceptable he doesn't have Britain's long term interests at heart.

  • Comment number 78.

    35. At 16:58pm on 11th Jan 2011, Jacques Cartier wrote:
    24. At 16:37pm on 11th Jan 2011, Justin150 wrote:

    > The MPs were stupid. Do they not realise that the
    > whole thrust of Companies legislation in the UK is that
    > the setting of salaries is a matter for management not
    > shareholders

    We ARE the flippin' shareholders, you chump!

    ============================

    Now you are not. The shareholder is through an UK govt entity. We are merely voters.

    Feel free to call me what you like - I am merely trying to be legally accurate. It has never been the case that shareholders have the right to determine the pay of employees, that is the responsibility of management. Shareholders can vote on directors pay but not employees pay.

    You may not like that position in which case suggest changing the law.

    But I forgot, facts should never get in the way of your prejudice


  • Comment number 79.

    @59

    You make exactly the right point, and as many have said the whole story of bonuses is irrelevant. The question is what is exactly the role of banks. Banks are nothing without customers. I work in IT, I have always seen my role as easing the job of others - support. Banks also are a "support" industry. Just like L_from_H's hairdressers. The difference is that, as far as I know, hairdressers don't claim to be a "source of wealth" (nor do they say they will move overseas if ...). Banks remind me of the classic business-model of so many web-based startups - we'll make money through advertising. All very nice, but everyone cannot be advertisers, can they? Advertisers are certainly needed, but someone somewhere must actually make or provide something worth advertising. It looks like bankers are living in a world where everyone would be lending money to everyone and making huge profits in the process. If only.

    What worries me most at the moment are the multiplication of ads "Trade Forex like a pro", "Make easy money" and so on that are proliferating on the web. Reminds me of the time when all cab-drivers were ready to share investment tips.

  • Comment number 80.

    43. At 17:17pm on 11th Jan 2011, taxpayer2010 wrote:
    Diamond is right, time to move on and get over it!
    _______________________________________________

    Thats right. These are not the droids you are looking for.
    Nothing to see here. Move along. Move along.

    Sorry WOTW. Had to use it. Cracks me up every time.
    Lots of banking bunnies out today.

  • Comment number 81.

    90% of all bankers give the rest a bad name.

  • Comment number 82.

    I don't really see why so many people have such a problem with bankers' bonuses. If they were complaining about bankers' salaries, then I might pay more attention.

    Bonuses, generally, are a form of performance-related pay. If people don't perform in a way which justifies the value of their bonus to the firm, then either they won't get their bonus, or they'll soon be replaced by somebody who does generate enough value.

    Should we complain about production workers who get paid piece rate? If they generated products that were worth as much value to their own companies as the investment bankers who get paid the 'excessive' bonuses, then I'm sure they'd be paid similar amounts if their companies didn't want to lose them.

    Let's stop following the herd who are merely driven by envy. Study hard, work really hard, and perform extremely well; then you too could earn large sums. I chose a different path and got other rewards, but I don't resent those who earn more than me. They lose out in other ways, where I gain.

  • Comment number 83.

    I'm sure that I am a lone voice in thinking that 'banker bashing' is just lazy, distracting politics - it has been very easy for David Cameron et al to bash the bankers, rah rah, that's what the voters want to hear. I believe that bank bonuses are GOOD for the UK recovery and UK economy. I watched some of the committee today and again it seemed to me that MP rhetoric was all about them showing the voters that they were 'standing up to the bankers' - at least I told him what for!'

  • Comment number 84.

    He should be damn well gratefull to the British taxpayers for their deposit 'insurance'. What would he have said if Barclays had been excluded from the Treasury plans? I didn't hear him say we don't need it thanks. And, as I keep saying, dividends should be tied to bonuses, you shouldn't have one without the other. Why should the backing owners be treated in this cavalier fashion? Answers please on a postcard to Mr. Diamond c/o Barclays.
    Regards, etc.

  • Comment number 85.

    Barclays didn't take have a government bail-out. Barclays borrowed from the middle east ( which has since been repaid ) and sold Barclays Global Investors to avoid it. As such, why are Barclays bonusus being called into question?

  • Comment number 86.

    I posted on 6 Dec
    "All this proves is that the bankers, whatever you may think about them, are much cleverer than the politicians"

    I posted on 23 Dec
    "It'll be the politicians who decide and if the banks can't run rings round them I'll eat my Christmas hat."

    So now I'm saying TOLD YOU SO.

    Hands up all those who didn't see this coming - ie the banks doing what the devil they liked.

    What - no hands up!!

    I guess we've just got what we expected.

    You're all just a bunch of cynics.

  • Comment number 87.

    I have always thought that Brendan Barber was a lightweight and his reported comment today re Bob Diamond's bonus proves it. Diamond didn't take his bonus last year or the year before. Hence there would be little point in the Government asking him to reduce it, as Barber suggests.
    I should add that the argument that banks need to pay big bonuses to keep their top talent doesn't make sense for the taxpayer-owned banks of RBS and Lloyds. Since by definition the top talent is highly mobile (otherwise no need for bonuses), any potential buyer of these banks will be valuing them on the basis of their assets and the quality of their loan book, not the identity of their top execs.
    So, no need for big bonuses at RBS and Lloyds. What a pity then that the last Government negotiated a contract that encouraged them to pay market-level bonuses. Anyone still think Gordon Brown handled the banking crisis well?

  • Comment number 88.

    In many professions (eg construction design), you need professional indemnity insurance to be allowed to operate legally - to bail out those that suffer if something goes wrong. Since this is what the government is implicitly doing, is it not fair to charge the banks like other professions, say 2.5% of turnover, as insurance ? And no, tax isn't meant to cover that.....

    It's either that or break up the banks - the moral case is you shouldn't get the rewards of risk taking at others' expense.

  • Comment number 89.

    18. At 16:26pm on 11th Jan 2011, Robin Joy wrote:
    Please can anyone make an informed estimate of how much Barclays dividend would be lifted if all the bonus money was added to it?

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

    2010 dividend would be higher.
    2011 dividend would be zero.

  • Comment number 90.

    If Bankers were to invest just one tenth of each million £ bonus in an EIS, they would enjoy a tax rebate of £20,000. Happy Investors!

    Their 1/10th £million investment could create 4 new jobs at salaries of £25,000 each. Happy Workless!

    Tax & NI for those staff would total about £24,000. Happy Tax-man!

    Unemployment is reduced. Happy Politicians!

    Graduate new employees could repay their Student Loans. Happy Treasury!

    Banks eliminate 'high cost' small loans to business. Happy Bankers!

    After 3 years, EIS shares are repaid from profits earned (free of Capital Gains Tax). Happy Business!

    After 2 years, EIS shares are exempt from Inheritance Tax. Happy Inheritor! Sad Taxman! Emotion of Deceased...unknown!

    Who's to lose? Even if EIS shares become worthless, losses can be offset against future tax.

    Could Cable convince Capitalists to contribute cash to companies?

    EIS (Enterprise Investment Scheme) is a Revenue & Customs approved way of qualifying businesses raising finance. Previously thought of as 'risky' investments, they should now be re-considered...especially by those stung from losses incurred through investing in RBS or BP shares!

  • Comment number 91.

    What evidence is there to show that banks were not capable of making satisfactory profits when bonuses were not paid to staff? I can see a case for paying a bonus to the man or woman that genuinely produces extraordinary performance but I can't see a case for paying bonuses to those who deliver a good job for a good day's pay.

  • Comment number 92.

    Diamond Bob should have just said:-
    1. Barclays has not taken money from the Uk tax payer
    2. The House of Commons has no moral authority after virtually all the MPs were found to be 'on the make and on the take'.
    He should have then got up and left.

  • Comment number 93.

    45. At 17:18pm on 11th Jan 2011, Lindsay_from_Hendon wrote:

    What about hairdressers? They're the real spivs. They cut YOUR hair for money. If you ask for a mullet and they give you a mullet, you have a mullet! This is their fault for giving you what you requested despite knowing that you couldn't pull the look off (as no one can).

    I'm sick of these parasites. They do nothing for society and so should be taxed at 1 billion percent. This would pay off the deficit immediately.

    We have lived as humans without hairdressers for much longer than we have with so clearly we should outlaw their "profession". It's easy to be a hairdresser, anyone can do it so if they threaten to leave the country there will be millions willign to fill their place and earn easy money. Hairdressers exhibit pure greed as their fees are only based on a Greed Index - they should cut it for a pound or even for free if they were like everyone else.

    Worse still, if you have hair extensions they sell YOUR hair back to you at great expense.

    Let's get rid of these spivs! Come on hairdressers, name one thing, just one thing that you do for society?
    ==============================================================

    I see that you consider your postings to be so cutting and amusing, that you have now decided to inflict multiple postings on us over several blogs. Maybe you posted this one so late on a previous blog that you feared your "public" might be deprived.

    I read these blogs regularly, but seldom post comments, because by and large I'm not qualified to do so.

    However I am as well qualified as any to identify pathetic, unfunny, self-indulgent "irony" posted by some sad attention seeker. Just for your information,your posts are not funny, not interesting, and not even ironic. Simply pathetic. You can, of course, post what you like, as we all can. But no more cut and paste of your own posts, please- once is more than enough, thanks.

  • Comment number 94.

    Interesting how the rate of posting from some of the more vocal and anti-banker posters diminishes after work hours. Are these people no longer earning their own perfectly justifiable salaries/bonuses by surfing the BBC business pages at work?

    Frivolity aside (I know you're watching Eastenders and Coronation Street to keep the other half company after a long day), any company or country would be bonkers to unilaterally start reducing the wages/bonuses of the people they are using to generate income (justifiable income or otherwise) to a point where those employees would be better off elsewhere. I'm sure the shareholders would be up in arms if that were to happen.

    The fact that the bonuses have got to such an enormous level is a problem perhaps, but globally enforcing Basel and then ramping up the capital requirements on top of that appear to be the only ways their remuneration can be brought back to what most of us would consider reasonable levels.

    It's a sad fact (maybe) that if you deal with money some of it sticks to your hands - they deal with so much of it that a bit more will stick to their hands than ours. But if it weren't happening I'm not entirely sure we'd all be as "happy" as we were in the days before greed overtook judgement.

  • Comment number 95.

    What amazes me is the hypocrisy of Osbourne. Before the election he made the following statement:

    “I am today calling on the Treasury and the FSA to combine forces and stop retail banks — in other words the banks that lend directly to business and families — paying out profits in significant cash bonuses,” Osborne said during a Reuters newsmaker event.

    “That includes their investment banking arms.”

    Pretty clear stuff. I imagined that this would lead to pretty swift action when in government.

    Apparently not. How typical of politicians, how typical of bankers. I think they all miss the point about how people in the UK feel, especially as the cuts bite. Or possibly they just don't care.

  • Comment number 96.


    The reason as to why the Govt has an absolute right and need to intervene in the business of the banks whether it be related to bonuses or anything else is that how the banks behave affects the rest of the economy.

    If they all decide as Diamond suggested that the time for apologies from the banks was over and that they need to get back to risk taking and to blazes with the rest of the economy then I would strongly recommend they build a big wall around the City to keep the rest of us out!

  • Comment number 97.

    78. At 18:32pm on 11th Jan 2011, Justin150 wrote:

    > I am merely trying to be legally accurate.

    Making a fool of yourself is what you're doing, Justin150. Hide behind that crap if you wish. We own it, because our money bought it, capisci?

    (jeez, some people have more front than a bus!)

  • Comment number 98.

    @ 81. At 18:41pm on 11th Jan 2011, The-itinerant-ex-pat wrote:

    > 90% of all bankers give the rest a bad name.

    Nah .. 99%.

  • Comment number 99.

    If our govenment hasn't got the ability to limit or control the supply of money this will surely affect its other 'levers' of economic control. This is surely an area that is key to our future potential prosperity.

    We have a situation again where the process and system is not fit for purpose.

    We have to make this system (banking) fit for purpose otherwise we will have absolutly no control over our economic and social development as a country.

    I believe we are in a situation where many processes and systems in this country will not stand up to scrutiny, these are evident in healthcare education and almost any area we care to put under the microscope of scrutiny.The way we are governed will also fall into this category to my way of thinking, it too needs reforming.

    It is possibly true that bonus payments paid to bankers are not the cause of the mess, but these are unacceptable consequences of poor sytems, structures and regulation.

    I do not believe banks create wealth. I feel though, some in charge have been seduced by money as wealth and have little to no idea the sort of problems this misconception will cause in the long term.

    We need a system in financial services that is fit for purpose. It is in reality the very first system a that must be fully scrutinised, reformed and fixed. This has to be a priority for us as a society, if our government refuse to, or are unable to do this, then we will have to do it ourselves.

    Only when the banking system is returned to society as a 'fit for purpose' system can we then start to look at other failing areas in our society, but banking must be sorted firstly, and the time for our politicians to start is now!






  • Comment number 100.

    This is really easy for me. I'll be seeking to move my banking elsewhere.

 

Page 1 of 3

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.