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The good and the bad of Barclays

Robert Peston | 11:04 UK time, Tuesday, 16 February 2010

It's plainly better for banks to make profits, than not (unless you are actively working for the destruction of capitalism).

Barclays logoSo it would be foolish to dismiss Barclays' £11.6bn of pre-tax profit - 92% up on the previous year - as of little importance.

Probably more relevant is its £9.6bn of retained earnings - because that is additional capital to underpin lending that our economy badly needs.

In fact, Barclays has become a much safer bank over the past year.

Its gross lending and assets are now equivalent to 20 times its equity capital, down from 28 - thanks to its accumulation of precious capital and because its gross assets have fallen from £2.1tn to £1.4tn.

Or to put it another way, a much higher proportion of its assets would have to go bad to bankrupt Barclays than was the case in 2008.

For which we should all be grateful - since its £1.4tn of assets is still very substantial, equivalent to the annual output of the British economy, which means that Barclays remains in the special club of too-big-to-fail banks that would always be bailed out by taxpayers.

Inevitably regulators continue to take a neurotically close interest in what Barclays is up to - and haven't yet decided whether its relatively integrated structure would allow sufficient protection for retail depositors in the event that there was a major accident in the investment bank.

It is the performance of the investment bank that is controversial in so many ways.

It should of course be said that Barclays' performance in retail and commercial banking has been pretty robust in the inclement recessionary conditions.

In the UK, Barclays made a £612m profit from retail banking and £749m from commercial banking.

That's well down on 2008, but is pretty creditable after £1.9bn of charges for bad debts.

Neither Lloyds or Royal Bank will have done as well.

However the truly big numbers come from Barclays Capital - where net income surged from £2.8bn to £9bn and pre-tax profit jumped from £1.3bn to £2.5bn.

It's that surge - in part due to Barclays takeover of the US rump of Lehman at the end of 2008 - that was responsible for Barclays paying out record bonuses of £2.7bn (see my earlier note for more on this).

Your attitude to whether those bonuses are appropriate will stem from four considerations:

1) the extent to which you hold all banks responsible for the Great Recession we've experienced;

2) the proportion of Barclays Capital's profit that is a de facto windfall from governments' and central banks' emergency measures to limit the depth of the recession;

3) the extent to which Barclays Capital takes risks that are effectively subsidised by retail depositors and taxpayers;

4) whether you think any bank should be paying bonuses so soon after all banks were bailed out by the unprecedented loans and guarantees provided to them by taxpayers (from which Barclays was a beneficiary, although unlike RBS and Lloyds/HBOS it wasn't semi-nationalised).

Tell me what you think.

Comments

Page 1 of 5

  • Comment number 1.

    To answer Roberts questions

    1. Banks are only partly responsible for the recession. Govt action on both sides of the Atlantic is just as guilty but when was the last time a politician actually admitted to mistakes?

    2. It is fair point but Banks have always taken advantage of favourable govt actions. After all before the recession there was the Japanese carried trade - it is simply a function of operating in a market that can get severly distorted by govt actions

    3. This is a silly point. All banks which have both a retail arm and an investment arm are taking risks with govt subsidy - that is how they get the bulk deposits from the public. That being the case it is worth re-examining the option of charging banks for having the govt guarantee (some banks may choose not to have it)

    4. That is a matter between the bank and its shareholders (who presumeably would prefer dividends to them rather than bonuses to employees) and of course the regulator to ensure the bank is managing risk correctly. I have no problem with bank bonuses if the alternative is that the bankers simply demand massive increases in their basic wage. I work in an industry where the concept of a low salary but commission (which means if you do well you can easily earn a six figure salary) is normal - bankers simply have an extra zero or two tacked on to their figures

  • Comment number 2.

    The fact remains that these are individual bonus', for individual employees... If they can substantiate why (or if) their individual performance was greater than what was expected of them, they get a bonus... simples...

  • Comment number 3.

    Robert Preston wrote:
    Tell me what you think.
    ----------------------

    If the majority of the profit came from other investment than pure banking, they should change their name from Barclays Bank to Barclays Casino.

  • Comment number 4.

    In February 2008 my company was profitable and trading quite happily. We had an overdraft facility of £75k, we used this occasionally. We had ran the business on average a facility of £20k over the previous two years.

    That same month we were called to the bank and told that our overdraft was now only £15k as we did not require it to be so large, we argued that this would affect our ability to trade effectively as we could not buy up front and get better deals. Nothing we could say or do could change their minds.

    The ability to buy up front was how we were profitable - the art of negotiation.

    The last two years have been a nightmare. We went from profitable to barely getting by. With little or no tangible support from Government or any Bank. Council's are really a waste of space, despite having empty units they still try and put up the rent "to commercial values".

    We have tried to retain staff as much as we can and the directors owners earn less than £20k per year - something the inland revenue do not believe, so we now have the prospect of a full blown investigation.

    Do we believe that small business is a risk, no, certainly no more than the crap deals done by the banks overseas. Do I believe that the banks are responsible, yes......do I believe that investment money is real, no......its created artificially and without any substance.

    Until the banks, government (both central and local) understand that in order to survive you have to make a profit and that has to be a tangible thing - a touchy feely product or service then I believe the cycle will continue. Support for real innovation and real people is what's required.

    CB

  • Comment number 5.

    I've just finished doing some research for an article on clean technology investment. One of the reports I read was a comparison of countries on the basis of sales of their clean technology products. It includes the 27 EU member states and all G7 and BRIC countries and the major renewable energy and energy efficiency segments.

    Overall the UK came 20th out of that 27 and was only that high because it appears we produce a lot of insulation products. We hardly figured at all when it came to the really clever high value adding kit.

    It was also reported recently that Norway is now second in the investment league table when it comes to risk equity capital.

    So "NO". Their bonuses are not appropriate or deserved. Barclays and their compatriots still don't get it.

    What this tells me is that Barclays and others of their ilk still aren't doing what they should be doing i.e. supporting and enabling growth and the rebalancing of the economy.

  • Comment number 6.

    Doesn't another BBC article state that that their profits are in large part due to the sale of an asset? How much would their profit be without this? Did they sell some of their 'crown jewels' in order to pay bonuses? Also, did Barclays raise capital a different way in the crash? Like HSBC got a loan from somewhere else? I can't remember to be honest.

    In short, how exactly did they make a profit?

    This whole bonus issue is rather tired and jaded now. Whilst paying large bonuses causes an outcry, we must remember that for front line staff bonuses are the only way they get a decent salary.

    Large bonuses are insulting to those people and small businesses who can't get loans or mortgages because the lending criteria are too severe. These businesses are failing, and whole rafts of families are still suffering while banks have a bonus binge.

    Until banks are forced to help those 'little' people called customers in a decent way, they will continue in their arrogance and greed.

    Will any political leader truly show the strength of character needed to break the stranglehold the banks have on our battered country? I doubt it. They are still 'too big to fail' and will remain so until they truly show humility and a genuine desire to return to true customer service.

    What about a bit of in-depth research into why they still aren't lending and helping small businesses? How about including the RBS loan to Kraft to buy Cadbury? From what I understand, Kraft already had a massive debt-so how come they get a loan and promptly close a UK factory, when small UK businesses which employ UK staff can't even get an overdraft? Or why hundreds of companies shift their manufacturing overseas?

    Come on Robert-you are business editor and a great reporter-bring this all out into the open!

  • Comment number 7.

    > It's plainly better for banks to make profits, than not

    Only up to a point. Beyond that point, banks become capable of destroying us. So it's plainly better for banks to make modest profits than gigantic ones, because gigantic profits are the precursors of gigantic collapses.

    There seems to be a slow erosion in our efforts to hobble the banks following their Blitzkrieg against our finances a year or so ago. Unless we cripple them soon, another bust is inevitable, and this historic chance to give proper, long-term “guidance” to banks will be lost.

  • Comment number 8.

    Mr Peston wrote: It's plainly better for banks to make profits, than not (unless you are actively working for the destruction of capitalism).

    Well I wouldn’t want to destroy capitalism.
    And I wouldn’t want to destroy socialism either.

    But I do note that reckless lending has a social cost, for example:
    Destitution
    Misery
    Broken families

    And the clean up cost is picked up by the country as a whole.

    Now think of the ‘polluter pays principal’.
    For example: If a company is negligent and causes pollution to a water course or land, that company has to pay for the cost of the damage.

    It is a method of making a company responsible for the damage caused to the environment, the social cost if you like.

    But the banking industry, is allowed to escape the ‘social cost’ of its negligence.

    So I don’t mind Barclays paying its bonuses, providing they pay for the social clean up cost of their reckless lending.

  • Comment number 9.


    I think:

    whilst BIG may make for financial economy within companies, be they banks or otherwise, it also creates enormous social stresses and injustices which dilute human efficiency and professional responsibility; creates opportunity for fraud etc, and in turn depresses financial economy.

    I prefer SMALLER and more accountable.

  • Comment number 10.

    I think all this banker bashing is pointless! Should they get a bonus, shouldn't they get a bonus?!

    If you look at the common cause of personal finance, corporate finance and governments' finance problems, what common factor do you see? Answer is simple - living beyond your means, trying to attain even more than you have, whilst completely disregarding what you already have!

    The once healthy attitude of striving to achieve the most you can in life has somehow become convoluted into grabbing the most you can whilst you can without a thought for the consequences.

    The majority of reader here will bash the bankers for what they earn whilst being more than happy about the fact that their house has doubled in value over the past 10 years or so, pricing out an entire generation in the process...do they care? Of course not!

    If you took a poll of the British public asking them if as a result of slashing bank profits the knock on effect to the wider economy included a freeze in mortgages and a resultant drop in house prices by, say, 30%, how many would they be happy? To re-address the "balance", would they be happy to see their property value fall to a sensible level also so that everyone in their community can afford to have a home? I highly doubt it!

    I do think bankers bonuses are obscene but only when you think about countless millions around the world that will be starving at this very moment whilst we argue about whether a banker should get 200k or 300k this year!!

    We as a global community have created this situation and unfortunately its too late to change it!


  • Comment number 11.

    Isn't a more important question whether banks as a whole are taking to large a slice off the top of the transactions that they carry out to allow them to make these sorts of profits under any circumstances ?

  • Comment number 12.

    # 9. At 12:06pm on 16 Feb 2010, healthytoes wrote:

    > I prefer SMALLER and more accountable.

    That's what we all want, and we have the mandate to make it so. Yet there
    is to little political follow-through, yet. Let's hope those dopes
    down in London get it in the end.

  • Comment number 13.

    I'm absolutely convinced that no bonuses should be paid by any bank to any employee until all debts to the public purse have been repaid. I see no reason why any ordinary citizen should endure any financial pain - or austerity measures - while the financial sector gets cream. Barclays is though an interesting case, because it didn't accept government bail out. However it was inevitably a beneficiary of the QE and other fiscal stimulus which global governments provided to sort out the sector as a whole - therefore this bank along with every other bank on the planet should be using every ounce of hyper profit to bring every sovereign debt into the safety zone. Why not?

  • Comment number 14.

    "It's plainly better for banks to make profits, than not (unless you are actively working for the destruction of capitalism)"

    Robert - that is like saying "it's better that you work hard and keep the Egyptian Pharaoh is happy with the Pyramids you're building or otherwise we (the slaves) will suffer - for it is better to work yourself to death that die at the hand of the whip"

    I don't mind a bit of poor journalism, but today the BBC has gone all out to disguise the truth from the public

    It started this morning when on breakfast (on the same subject) the point was made six times in half an hour that Barclays were not in direct receipt of taxpayer bailout.

    ...even though they had an expert on the sofa who made it clear that if the Govt. had not stepped in Barclays would not exist

    He pointed out that banks have all directly (or indirectly) benefitted from the various bailouts.

    They even had a seperate story showing that credit card rates are the highest in 4 years - even though the base rate is at 0.5%
    ...and you wonder where the banks profits are coming from?

    How is borrowing at a subsidised 0.5% and lending out at 15 - 25% on a credit card - NOT BEING SUPPORTED BY GOVERNMENT!!!!!!!??????

    We even had the pathetic columnist of 'City girl' who supposedly works in finance. Does she appear to be someone who is so 'saturated with talent' that she deserves a bonus over 100 times greater than the annual salary of the average working Joe? - I'm certain anyone who saw the vacuous interview will vehemently disagree.

    I mean she could not justify the bonuses paid out - the dumbed down questions allowed her to make the unchallenged statement of
    "well the actual monetary value of the bonus is irrelevant - they are paid a percentage of the income they generate

    I was screaming at the TV for the follow up question - how is that income generated? what value does the banker add to justify it? - but once again the BBC decided to ignore the call of journalism and instead started asking specifically "so how much is too much, 100k, 200k?" - possibly because the BBC's breakfast presenters are worried that wage caps might be applied to them too.
    ....well if you're not up to the job - then you should not be paid like you are.

    This is a conspiracy of epic proportions. The BBC is clearly ensuring that the fundamental questions are not being asked of the financial sector - questions that cannot be answered with anything except the truth.

    Yeah, ok then, so bankers 'make money' - and so did the magician I saw at a kids party last week when he 'produced' a wad of cash from his top hat.

    Alas, the magician is a con artist - just as the banker is. Just because the majority of the crowd think the magician is actually performing magic - doesn't mean it's true.

    ...and that is a parallel with banking which cannot be ignored. For God's sake I work here - take it from me - these aren't even very talented magicians - and so many mugs are falling for these lies.


    I'll tell you what I think Robert - the BBC should be ashamed of itself because either through ineptitude or corruption they are not portraying the truth.

    Invite me on the TV and I will show you how to interview a banker - as I work in this industry I know the questions they don't want to be asked...

    ...but then journalism is no different to banking - it's all about who you know - right Robert?

  • Comment number 15.

    I keep hearing the phrase on the radio and TV today ...'their bonus money'.

    Is it 'their' bonus money? Or, is this 'our/stakeholders' money that is filched by those on the 'golden ladder' as the 'top slice' before it runs into the official corporate accounts i.e. it isn't anyone individual's money - it is simply money being misappropriated by sophisticated criminals, under weak legal, regulatory and accounting processes before it is analysed properly by external accountants, for company accounting purposes.

    It seems that the current sleaze with fat cat bank bonus payments is a complex mix of issues - not of least importance being what can a customer, shareholder, other stakeholder (and there are many in this category and scant attention if any is being paid to this issue) reasonably expect of a UK domiciled or indeed a non-domiciled bank doing business in the UK in terms of proper appropriation of those gross funds accumulated as part of its banking and trade operations.

    Irrespective of whether there is another banking or mortgage crisis looming surely attention must be paid to the abuse of the 'golden ladder' system of an exclusive small club of fat cats lining their own pockets when it is only the leverage of a particular bank itself and all of its resources including all staff within the bank - it's privileged and licensed position in terms of its relationship with the public that enable the bank to make any money at all.

    I see the situation as both an economic and political issue as this undermines confidence in everything we do, as the stakeholder majority, particularly when the banks are is still moving in to re-possess the homes of unfortunate people/families who are the real victims of the banking generated economic problems that now consume or affect 80% of the population as now worse off, financially; over the last 13 years.

    It is absolutely sickening that these fat cats are still enabled to do this and this rotten Labour government and the next need to take an urgent lead immediately in eradicating this criminality - because that is what is must surely be or be recognised to become.

    There will be very little progress made on this I fear until a competent government tackles the underlying issue of constitutional rights and privileges viz-a-viz our 'banks and other financial institutions' and UK 'stakeholders' being UK taxpayers, savers, investors, clients, shareholders, employees and even members of the public - because their operation is dependent entirely on political considerations that underpin the rights and privileges of every person in this nation and their relationship with every company and business that does business in or with the UK.

    The issues are involved and I doubt that no one individual can tackle all of the matter but I fear the matter will be settled most unsatisfactorily in a back room somewhere between a couple of MP's and few bankers - and we'll be back to square one several times over on this until all of the stakeholders are properly represented in the process of eradicating this sleaze and criminality.

    However, until this 'ideal position' of 'full stakeholder, full representation on the golden ladder' - surely the simple solution is to tax these bad banks immediately 'through a special corporation tax in the next budget' - until the pips squeak and the sleaze criminal bonus and other likely unknown abuse disappears. There will be threats of some of them leaving the UK - tax those who say that harder in the short term to get some money back and if they go - good riddance - that is the price/benefit of standing firm.

    One thing has become clear from the last year or so of banking created and related problems - the UK money supply and banking practice is a national asset and is not something that can be left meekly to any group or single bank to regulate itself/themselves - not even the BoE.

    We know that banking is a worldwide and that higher bank taxes can disproportionately affect banks that pay higher taxes - it can also lead to higher consumer confidence, since stakeholders can see action and 'justice being seen to be done'.

    'Justice being seen to be done' - v - 'it’s theirs, rather... MY/OUR bonus'

  • Comment number 16.

    Banks should be serving the real economy but, thanks largely to the stimulus package which has encouraged casino speculation, the real economy serves the banks. The banks cannot lose, because of high frequency computerised trading, which Max Keiser, who knows a thing of two about high frequency trading since he patented the system currently in use, explains very coherently on YouTube.

    The price we will pay for the bankers' bonanza is hyperinflation, as the video at the end of today's post on this blog shows:-

    https://britisheconomydiary.blogspot.com



  • Comment number 17.

    Dr Dave, published some excellent figures, on the previous blog, combined and repeated here:

    Year Profits Tax Percentage
    2006: £5.2bn £1.9bn 36%
    2007: £5.1bn £2.0bn 39%
    2008: £5.3bn £0.8bn 15%
    2009: £5.3bn £1.4bn 26%

    I'm reproducing these to show that profits earned in a year, don't always relate to tax paid to HMRC.

    This is all legal, but demonstrates that we the country, probably get more tax revenue from what it pays it's employees than what it actually pays as a corporation. I mean 3.7bn in bonuses alone should bring in at least 1.5bn in tax & NI.

    This slightly waters down my feelings about the bonuses, because if the tax is paid here, we'll get more revenue from it than if Barclays kept the money. The basic principle is still incipid however.

    Corps like Barclays try very hard not to pay tax, using methods that most normal folk wouldn't have access to, or be able to use.

    So perhaps we're not too different from our Greek non-tax paying neigbours?

  • Comment number 18.

    Pesto,

    1) Insofar as in a healthy culture each individual has enough intelligence/knowledge to be au fait, I do not hold banks responsible for the Great Recession. But UK culture has been pathological for a good 20 years. The banks know this (without doubt they employ the best brains - and brain works better without a heart) and did not indeed could not precipitate events which led to the GR. However, when socio-economic sanity was patently on the wane they made hay while the sun shone and, to that extent, they are wholly responible.

    2) Since QE has been exclusively deployed in banking, BarCap's profit is
    likewise generated.


    3) So long as status quo of the infrastructure of UK casino banking remains, BarCap's operational risks are covered and neither recklessness nor prudence comes into it; the brains would not commit either especially in this politically sensitive time.

    4) The problem is not the bonus, the problem is the infrastructure which Governments/shareholders/customers have continuously connived with through a mixture of ignorance, complacency, self-interest and myopia.

  • Comment number 19.

    1. At 11:25am on 16 Feb 2010, Justin150

    "1. Banks are only partly responsible for the recession. Govt action on both sides of the Atlantic is just as guilty but when was the last time a politician actually admitted to mistakes?"

    ...and why do Governments have the mandate to take action on the Economy? - Ah yes, that would be because in the past they have had to create institutions like the Fed and BoE to save the collapsing system - did we forget that Justin150, or do your history books only contain the last 20 years?

    "2. It is fair point but Banks have always taken advantage of favourable govt actions. After all before the recession there was the Japanese carried trade - it is simply a function of operating in a market that can get severly distorted by govt actions"

    So the actions of the market are absolute - no concern for the prolonging of the Japanese crisis at the benefit of the currency speculators? Why do the people matter - it's money that matters - right?

    "3. This is a silly point. All banks which have both a retail arm and an investment arm are taking risks with govt subsidy - that is how they get the bulk deposits from the public. That being the case it is worth re-examining the option of charging banks for having the govt guarantee (some banks may choose not to have it)"

    ...and when a bank decides not to have it, based on their 'mark to fantasy' accounting practices - will you be calming the savers who lose out when the bank does a NR? - or is that where we expect the Government to step in and save the day (back to point 1)

    "4. That is a matter between the bank and its shareholders (who presumeably would prefer dividends to them rather than bonuses to employees) and of course the regulator to ensure the bank is managing risk correctly. I have no problem with bank bonuses if the alternative is that the bankers simply demand massive increases in their basic wage. I work in an industry where the concept of a low salary but commission (which means if you do well you can easily earn a six figure salary) is normal - bankers simply have an extra zero or two tacked on to their figures"

    The banks are the shareholders - these 'shareholders' you talk of do not exist in any number to have an influence. Who owns Barclays? If you total the big boys you will find they have control - what does the King of Qatar care about bonuses? Why should he give a monkeys about the inequalities in wages in this country? Why would he even know about the risk taking of the bank to make an informed decision - did you know about the risks lloyds were taking when taking over HBOS? - well it seems nobody else did either.

    Commission earnings is the wrong sort of motivation. How many products have you sold to people in your lifetime who didn't really need it, but you were very persuasive because you wanted to pay for a new holiday with your commission.
    Securitised debt and Mortgage provision are two classic recent examples of commission sales being a short term benefit but a long term pain - or do you deny this is the case?

  • Comment number 20.

    Please could you explain why the dividend payable to shareholders is so low following these results - 2.5p per share for the year? Thank you.

  • Comment number 21.

    I genuinely don't know what I think of this.

    The real question for me, which I don't know the answer to, is whether Barclays made these profits simply through honest trading, or whether they have been helped by anti-competitive practices and government intervention.

    If they have made these profits by running their business well in an open market, then good luck to them. They deserve to be rewarded.

    However, I have a nagging doubt that perhaps it's all a bit artificial. I know they didn't get a direct handout from that taxpayer, but to what extent did they benefit from QE or other government actions? And has the banking market been distorted in any anti-competitive ways? How about the merger of Lloyds and HBOS, for example, which surely would never have been allowed under normal circumstances?

    Robert, if you could answer those questions in an intelligent manner, I might be persuaded that you are entitled to the huge salary that you are undoubtedly paid.

  • Comment number 22.

    Before anyone defends Barclays, other banks and their staff, please read comments numbered 4 and 5 by Polaris md and Wee-scamp at least twice. Then read WoW at 14. Then read comment 4 again and try to understand that person's situation.

    May be after all that, you will understand how the rest of us feel and why.

  • Comment number 23.

    Aren't these the same profits on which huge bonuses were paid a couple of years ago and which turned out not to be profits after all?

    Get ready for another big bail-out fellow taxpayers!!

  • Comment number 24.


    Mr Roberto you write

    '...the extent to which you hold all banks responsible for the Great Recession we've experienced'

    Seeing as you've asked Mr P !

    a.Bank Directors and Bank Risk Management Committees: 20%

    b.Parliament and the various bits of legislation on
    Companies and Banks : 20 %

    c.Treasury Civil Servants and Treasury Gov't Teams : 35%

    d.Rating Agencies : 10%

    e.Auditors and Accountants : 7.5%

    f.Institutional Investors of the Banks 7.5%

    g.US and Mr Greenspan 1000% (appx)

    h1.Ordinary small shareholders -50%

    h2.Ordinary consumer-driven debt-loving UK households 20%

    i. Everyone/ Every Group otherwise (BoE,FSA, etc) x %

    j.Robert Peston of the BBC 1%

  • Comment number 25.

    10. At 12:10pm on 16 Feb 2010, notabankerbasher

    Have you ever heard the phrase that "money won is more easily spent than money earned"?

    Generally it's applied to gamblers - but it works the same for bankers too.

    Considering you reached the conclusion that the cause of the crisis was over-extension, you have not made the step which tells you why that over-extension occurs.

    Inequality - which is why you have people who earn less than 10k a year trying to live life like a pop star.

    ...and what is the biggest and most obvious unequal distributions of wealth? - ah yes, finance.

    Your post smacks of fatalism - and I disagree that this situation cannot be changed. The continual questioning of bakers bonuses is a sign of change as we speak.

  • Comment number 26.

    Robert,

    'It's plainly better for banks to make profits, than not'

    Is it really good news that Barclays could become the investment bank of choice if we have all gone long on RBS?

  • Comment number 27.

    10. At 12:10pm on 16 Feb 2010, notabankerbasher wrote:

    "If you look at the common cause of personal finance, ..... without a thought for the consequences."

    I totally agree.

    I would be in the minority of your poll and from what I have read on these blogs, there are a few of us.

    Government is not supposed to make us happy but indeed are elected to preserve some kind of "balance" and order (justice).

    You seem to present the opinion that those of us who live within our means and live a balanced sane existence should join everyone else. Not quite sure how that sits with your starving millions.....

  • Comment number 28.

    Thanks RP for a better post than your first one this a.m. Much more thought provoking, as the quality of the posts I think indicates.

  • Comment number 29.

    16. At 12:37pm on 16 Feb 2010, economaniac

    ...and is this a sign of that Hyperinflation?

    https://news.bbc.co.uk/1/hi/business/8517156.stm

  • Comment number 30.

    To my mind, the central issue is not why the bonuses are so big, it's why the investment banking profits are so big. If the investment bankers really were creating the profits that the banks are reporting, they would deserve to make money. The problem is that I'm convinced that the profits reported aren't real.

    If we go back to basics and look at how banks contribute, it's by making money available to people who want it.

    When a bank makes significantly more of its profit from using its pile of money to gamble than it does from making it available to people who want to borrow it, something is broken. Until we fix whatever imbalance or scam lets the investment bankers conjure these profits out of thin air, the financial crisis won't have gone away... Because sooner or later, just like happened to Bernie Madoff, circumstances will stop the party and it'll all come crashing down again.

  • Comment number 31.

    The only way to work out whether these are "real" profits or the result of actions taken across the globe by governments to manage the recession is to compare Barclays Capitals percentage profitability against the market average. I'm sure someone must have done this...

    I've no problems with any bank handing out big bonuses if they are out-performing the market. But I have real worries about the shape of the banking sector if they are paying out big bonuses for under performing against the market.

  • Comment number 32.

    17 - I am assuing that you have picked up those figures from the accounts? If so it won't include PAYE/NI in that figure as effectively the employee pays that not the company (other than Employees NI) and that figure will be buried elsewhere. It will also, more than likely, have elements of deferred tax and other accounting adjustments and won't represent the amount paid to HMRC in total for the bank

  • Comment number 33.

    It would be reasonable to levy a temporary tax on investment banking profits - maybe imposed for the next 8-10 years - since these banks continue to enjoy a highly profitable business because of the risks and guarantees undertaken by the state as a whole.

    Of course, politicians and tax policy rarely operate on a window beyond the next election, so apart from resistance from the City, the odds are against it being instituted.

    There could incorporated into this a tax an incentive for banks to improve their lending/assets to capital ratios to a prudent level.

    The bonuses and profits do not worry me too much if there is a system in place to ensure that the public purse benefits appropriately from the success of the business and its employees.

    The rate of tax would be debated but it should be designed to raise some billions each year from the industry as a whole at current profit levels.

    And we need the government to be responsible enough to plough that revenue into reducing our deficit and stabilising our national finances - as part of a wider programme of assiduous debt reduction.

  • Comment number 34.

    @scribbler2: "I'm absolutely convinced that no bonuses should be paid by any bank to any employee until all debts to the public purse have been repaid."

    Do you have any perception of the size of this bank at all? Not every employee of Barclays works at Barclays Capital! There are staff in the branches, call centres, processing offices all over the country, office workers in their headquarters... these people have mortgages, children, live in the same streets as us, go to the same shops, same restaurants, etc. etc. - ordinary people, living in ordinary houses, with ordinary jobs, why should they-- when they have no doubt worked through an extremely tough year at the bank-- be denied a bonus? They had no control over what the bank invested in, how it generates profit etc., they just work for it ensuring customers like yourselves have a bank that works. You pay a cheque in, you expect it to be processed. You use the ATM, you expect your money to come out. You pay by Chip & Pin, you expect it to go through. You expect a statement, you want a cheque book for free, a debit card for free... this isn't all done by magic you know!

    It seems in Mr. Peston's eyes, Barclays can never do right. They didn't take any Government money, yet he's constantly harping on about how they 'indirectly' benefited from Government schemes. So did every single bank in the world. Where's the bad press about HSBC? Santander? It's always Barclays, Barclays, Barclays with this man. They don't pay bonuses to their top staff, yet it's still an issue. Hell, if MY company made £11.6 billion pounds profit in a recession, I'd bonus them appropriately!

    Just accept the fact that Barclays is a well managed bank with clearly good staff working for it, and get over it.

  • Comment number 35.

    Bashing bankers and their bonuses is becoming boring (like MPs' expenses). The bonuses are going to be taxed at 50%! Surely, large bonuses are good for the government's coffers. So if the bonuses are partly a result of government actions, then the government are receiving their fair share.

    I sympathise with businesses whose liquidity facilities or loans have been scaled back. However, this is why it is called the credit crunch. Wholesale funding is harder to come by and more expensive, so therefore there is going to be less loans to go around. This is the new reality people will have to live with. I would have thought people would be happy to see banks (RBS et al) returning to profitability.

    Regarding the small dividends paid this year. I would have thought that the majority of shareholders would prefer Barclays to be well capitalised by showing restraint on dividends.

  • Comment number 36.

    What a stupid article Robert. It is time for an end to bank bashing as it is completely pointless. Barclay's did not receive any direct support from the taxpayer.

    It is true that they have benefited from the wide ranging support to their industry but is that their fault? They are a business, there principle objective is to maximise profits and this they have achieved.

    Any other questions about their role in society and the scale of their profits should be answered by those managing our economy.

    Unfortunately it just so happens that our economy is being managed by a select crop of incompetent incumbents that are perminantely paralyzed like rabbits in headlights by the past and future events.

  • Comment number 37.

    Robert, yet agan you play class politics! The vast majority of workers in financial services in the City of London earn about £40k. The top 10% earn more and of that the very top 5% earn the millions you have such an obvious bee in your bonnet about.

    I fail to see how you, an employee of a state protected monopoly have the cheek to bang on and on about this. Your frankly unhinged obsession led to some of the worst reports I have witnessed and actually in part led to the recession!

    For the sake of clarity and honesty, how much does the BBC pay you and what bonus did you receive the last few years? Come on...

  • Comment number 38.

    I'm glad Barclays is prospering, as the economy needs strong banks.
    The bonuses, however, are an outrage. Barclays has hugely benefited indirectly from taxpayers' support/insurance to the banking industry, plus the centrally provided cheap liquidity-fest. The freezing of the 2 top dogs' pay is simply tokenism, a disengenuous PR exercise. (And they, of all people, can afford to be restricted to a mere £1M or two!)

    Why are the politicians not clamping down more effectively on such obscenities??

  • Comment number 39.

    #17. Crookwood wrote:

    "Thanks Dr Dave for interesting figures"

    I second that as Dr Dave answered my question - that I too idle to look up!.

    I would also add that the way that banks create their accounts under GAAP allows them to hide profits very easily in reserves and in reality a banks profits before appropriations to reserves are generally quite a bit higher. The global audit profession has a lot to answer for in working with with the banks and legislatures to hide the real profits of banks.

    So in summary: it is probably true that Barclays is not paying its fair share of tax to the UK, as if they were any other citizen let alone the beneficiary of bail outs of the global banking system.

  • Comment number 40.

    If what I have just read is correct, Barclays and other banks may have something to worry about:-

    See 'Hot News' at the end of today's post on this blog:-

    https://britisheconomydiary.blogspot.com

  • Comment number 41.

    Retail banking and investment banking should be separated . If the casino bank went bust , no government money would be required.

    It's the only solution, to stop it happening again

    Because it will.....

  • Comment number 42.

    32. At 12:57pm on 16 Feb 2010, Horned_Devil wrote about the P&L figures for Barclays

    I didn't collect these tax figures, but I agree these are probably not the actual tax paid figures, which are likely to be less.

    The issue is that if the bonuses are properly taxed and paid in this country, the tax revenue on these bonuses will possibly exceed the tax paid by the Barclays corporation.

  • Comment number 43.

    1) They are all responsible. How many of them played by safe? None. Did they jump up and down and alert us all as professionals about the coming, predictable problems? Nope. Barclays was determined to stay away from a government hand-out.

    2) What profit would they have made if the governments had sat back, arms folded and watched the deck of cards fall over? I'm pretty sure they'd have fallen over too. So they benefited. It was a rescue of the financial system, not just specific banks.

    3) well since we the the global tax payer have subsidised the financial system...

    4)Nope. Not a penny in bonuses should be paid. It demonstrates a dire lack of learning. It also demonstrates a level of ingratitude for rescue of the system that is simply breathtaking. In no other industry is there a belief that employees arrive at work and sit there playing with paperclips all day and the only way to get them to do their actual job is to pay them a bonus. All the inventive needed is to be shown a P45 in one hand and a pay packet in the other! If bonuses were the thing, why do police ever bother arresting anyone? Finally, and more importantly, these bonuses have been demonstrated to be no more than a national security risk in my view. Weren't the EU ministers warning the 'markets' that they will not succeed in 'bringing Greece down'?

  • Comment number 44.

    23. At 12:48pm on 16 Feb 2010, yukapataya

    "Aren't these the same profits on which huge bonuses were paid a couple of years ago and which turned out not to be profits after all?"

    ...and that's the REAL danger. If sovereign states begin to fall then the losses will not be sustainable by these so called 'not me Guv' banks.

    A Dubai and Greece default alone will collapse Barclays - and then you're right - it will require another bailout.

    I wonder how many people will remember the suggestion that 'Barclays staff earned their bonus' - if a bailout is needed.

    You only have to look at the involvement of Goldman Sachs in the run up to Greek debt crisis and it's entry into the Euro and you can see the banks are playing all sides off each other.

    Creating crisis to profit from crisis.

  • Comment number 45.

    34. At 12:58pm on 16 Feb 2010, supbilly

    Well managed!
    They sent the statements to my new account to a heroin addict treatment centre for 5 months when I opened an account at the beginning of 2007! It was a nightmare sorting that out. As soon as I had the paperwork I closed the account! Never, ever again.

  • Comment number 46.

    34. At 12:58pm on 16 Feb 2010, supbilly wrote:

    "Just accept the fact that Barclays is a well managed bank with clearly good staff working for it, and get over it."

    Oh you are going to regret those words - pride before a fall.

    You should stop reading the internal memos and look at reality - the whole banking system is based on exploitation of Labour - yours, mine, everyone who actually works for a living.

    It's not unexpected that most banking employees (no matter what level) have a real difficulty grasping this fact.

  • Comment number 47.

    "where net income surged from £2.8bn to £9bn and pre-tax profit jumped from £1.3bn to £2.5bn"

    Don't forget that they have had a full year of ex-Lehman business now so one would expect an increase in profits. So a different take on this would be "Barclays make an excellent purchase" but that would not inflame the masses would it ;)

    As I said previously:

    Barclays have made a profit - well done to a UK company.
    Barclays have paid bonuses to their employees thus exercising their fundamental right to chose how to run their business
    Averages do not tell the story - I am sure the cleaner did not get the average
    Barclays avoided taking Govt money - surely that is a good thing for us all
    The bonuses paid will filter through to the wider economy whether it is from a car salesman or an airline pilot

    What I do not understand from those who say 'anyone can do this', including the so called 'experts', is why they haven't? Did they buy bank shares at their low and make a profit from this? Did they borrow money and then lend it to others?

    Perhaps there are so many who know how to make money that we can expect to see a vast increase in the number of financial companies in the next year.

    Just a thought

  • Comment number 48.

    35. At 1:00pm on 16 Feb 2010, Dr_Doom wrote:

    "I would have thought people would be happy to see banks (RBS et al) returning to profitability."

    ...that's because you don't think about where that profit comes from - you accept the banker fantasy that it's plucked from the air by people who are 'better than you' - which they clearly are, simply because they get paid more.

    My (made up) friend is a crack-cocaine dealer, he makes £40,000 a week - is he more intelligent than a banker? Does he have talents a bankers doesn't - or is he simply operating the same principle as a banker, "get them hooked and suck them dry".

    Credit / crack - it's all an addiction brought about by emotionally damaged human beings or desperate people. Sure there are some people in 'ordinary life' who are able to suppress their addictions - just like borrowers - but there are always enough who can't - but the seller does not care.

    It's true a banker won't kneecap you if you don't pay up - but then a banker doesn't need to as the law will happily 'financially kneecap' you if you do not pay the debt owed.

  • Comment number 49.

    There are a lot of bank supporters here today.
    This pharyngulation wouldn't be actively encouraged by Barclay's management would it!
    We know not everyone earns a pile at the banks and we are all pretty sure the cleaner needs housing benefit to keep a roof over her head. Bankers means traders et al, around here.
    Though, morally, I couldn't work within an organisation that was so cavalier and put at risk the security, health and way of life for so many people in so many countries - this has terrible effects on the third world and their ability to buy basic foods.
    For me, 'I only worked on the reception desk' wouldn't help me sleep so I'd walk away.
    In my line of work, the consequences to human health would be dire, so morally I'd be obliged to resign. Still, each to their own.

  • Comment number 50.

    RP you should look at the fact that in 2009 Barclays set up a Structured Investment Vehicle called Protium and sold £12.3bn assets into it so that this doesn't have to be marked to market...

    As Gillian Tett (FT) said in her article of Sept 2009

    "But in another sense, there is an uneasy echo of the past. Most notably, by selling those $12.3bn assets to Protium, what Barclays is essentially doing is taking a pile of toxic items out of its front room (ie the balance sheet) and stuffing it into an entity that is not inside the house (the garage, or cellar).

    After all, the fine print of the Barclays announcement makes it clear that while the British bank is going to count the Protium assets as being “on balance sheet” for regulatory purposes, it is removing the assets from the balance sheet in accounting terms, since Protium is legally “independent”, based in the Cayman Islands.

    That means the bank will not need to report the mark-to-market value of those assets, or reveal the source of equity finance for Protium that supplements the Barclays loan. Nor will it need to control the pay of the people running Protium, since they do not count as Barclays staff."

    See link below for full story
    https://www.ft.com/cms/s/0/178ea472-a3b5-11de-9fed-00144feabdc0.html


    Also in the Barclays announcement today they explain

    'On 25th November 2009 the Group reclassified certain financial assets, originally classified as held for trading that were deemed to be no longer held for trading purposes, and thus considered as loans and receivables. The reclassified assets comprised Collateralised Loan Obligations (CLOs) against which the Group held credit protection with monoline counterparties rated below investment grade.

    ...If the reclassifications had not been made, the Group’s income statement for 2009 would have included net losses on the reclassified trading assets of £49m (2008: £2m). After reclassification, the reclassified financial assets contributed £192m (2008: £4m) to interest income.

    See link for more detail here
    https://ftalphaville.ft.com/blog/2010/02/16/150026/solving-clos-at-barclays/


    These are just a couple of examples of how accounting rules are manipulated to project higher profits when nothing in reality has changed.

    How can investors invest with any confidence when we know that profits can be manipulated so easily?


    This is particularly important for financial reporting of banks and insurer as they hold such long dated assets and liabilities.

    If they are not being completely transparent there bcould be many problems which will not be revealed for years!


  • Comment number 51.

    Mr Peston,

    Please can you get that Aussie chap or one of the other guys who go out round the UK in rain & snow to do some business blogs please.

    In the meantime I have identified that the BBC could reduce the number of Economic editors by 1 to 1 - no charge for that cost saving idea as the saving can be used to create 5 or so non-politically biased jobs making the Blue Peter garden look nice. This seems to be the way that job losses & creation seem to be positively spun nowadays.

    Warm regards, frustrated in the East Mids

  • Comment number 52.

    Just want to comment on your points 2 and 4.

    Ok so Barclays (and other investment banks) are making some windfall profits but this surely 'repays' the tax payer as these organisations will be paying tax on these profits.
    If the banks concerned pay out some of their profits as bonuses this is surely beneficial to the taxpayer. I believe corporation tax is around 33% so if Barclays payed no bonuses, profits would increase and these profits would be taxed at around 33% (probably less than this given tax planning). If bonuses are paid then these are taxed at 40%, or higher if you include NI contributions - a much better deal for the HMRC and the taxpayer.
    Also, even though the effects of intervention appear to have been concentrated in increase profits for the banks, at least some of the cash is getting into individual's pockets (all be it a relative few in the city) and at least this can then be 'spent' on goods and services ultimately increasing overall economic liquidity.
    To be honest, I'd rather have the cash in the hands of individuals who spend in the free economy, than in the hands of Alistair Darling and Gordon Brown.

  • Comment number 53.

    Robert, you say "That's well down on 2008, but is pretty creditable after £1.9bn of charges for bad debts. Neither Lloyds or Royal Bank will have done as well."

    I agree - I would suggest this is down to 2 things:
    1) Lloyds having to take on HBOS and the hidden debts therein.
    2) Barclays being saved as Sir Fred dove infront of the bullet that was ABN AMRO.

  • Comment number 54.

    1) They are 100% responsible. They begged for Glass-Steagall to be reversed. They are the ones with the Bonus culture (i.e bonus for gambling culture.) They are the ones that persistently demanded self-regulation for their Directors and businesses, (rather than Legislation - which is what should have happened and what should certainly happen now!)They are the ones who completely failed to understand the risks THEY were taking. (If I bet wrong, I lose, I don't get taxpayer assistance. Barclays got no DIRECT help, true, but they certainly benefited from the INDIRECT help given to the others - cheeky blighters, phoning up Radio 4 to chirp about getting no Direct help! They only went and got Help from Abu Dhabi, and paid more for it, just so they could say no DIRECT help? Barclays are pathetic!!!)

    2) They made their profits entirely out of recovering asset prices on the back of Government bailouts. Without the emergency TARP, QE, bailout etc, there would be no banks. Barclays have only managed to do what the others, e.g Goldman Sachs & J.P.Morgan have done. Nothing special about Barclays.

    3)Ask Barclays why THEY are so hysterical at the idea of splitting Barcap away from Retail? Answer - the Capital! I'm with Obama, Merv, Vince Cable et al on this one. "No more socialising the losses - EVER!!" Barclays should just be told where to go, quite frankly! (Get to it Alistair.)

    4) Are you joking? Apparently my NI is going to "rocket," my council tax will no doubt take a hit, petrol tax will go up and lord only knows what further environmental taxes will go through the roof to pay for banker incompetence forever, basically! Only yesterday we were told, unlikely to get our money back from bank share sales for, "at least 5 years." The one bit of good news is that two RBS dealers threw in the towel and have gone off to Japan. Wonder if the Japanese have relaxed attitudes towards gambling? Would be slightly surprised if they did, given their bank failures in 1998, still haven't recovered from them!

  • Comment number 55.

    This is not a case for an exercise of opinions but a further illustration that retail banking needs to be separated from the bookmaking or casino banks.

    There is every good reason for the taxpayer to stand as the final guarantor of a retail bank as in so doing we are protecting our own interests.

    However there is no reason why this guarantee should apply to the bookmaking or casino banks. If retail banking was separated from the casino then I would have no problem with bonuses or even tips being paid to the croupiers or whatever they choose to call themselves because it would be none of my business.

    I am unable to understand why retail banking is not being separated from the casino banking as a matter of priority. This would remove all the turmoil connected with banks and bonuses. Surely, it is in both the interests of the taxpayer and the bankers. So why isn't it happening?

    The only conclusion I can draw as to why this division has not been enforced by the government and accepted by the banking industry already is because the casino banks would rapidly go bust without the guarantee of the taxpayer. As a taxpayer such an arrangement is quite intolerable.

    A deal could be reached by which the casino bankers can have their bonuses if in return the taxpayers get the separate retail banking system they need. At the moment the traffic is all one way and it is quite disagreeable.

  • Comment number 56.

    Ref :: 35.......The funding reduction applied to small and medium businesses was NOT caused by the credit crunch. That was caused by the banks making riskier investments than those they gave to UK small and medium businesses (most of which was secured).

    When those banks realised the huge cock up they had made elsewhere they turned to the only source of liquidity they could easily lay their hands on (until the bail out). They reduced the credit available to credit worthy companies and people, this was the so called the "credit crunch".

    We already had the "secured" credit thanks very much, (secured on directors houses by the way), what the banks needed was the cash available in their business to fund their wages and their running costs. So they screwed us all.

    I did not screw up, they did, but I and our employees are paying for it. As are the other small UK companies.

    The money the bank of england has pumped in has not in general gone where it was targeted, it has gone to the bank's balance sheets so they can use it to "invest".

    Barclays are, in my opinion, no better or worse than the rest. They, like the government in general just don't get it...."it" is not greed, "it" is not trying to cause the downfall of one currency or the other to generate a profit, "it" is not the buying and selling of companies using debt to do it, "it" is a moral responsibility to do something tangible, or at least try!

    CB

  • Comment number 57.

    “Probably more relevant is its £9.6bn of retained earnings - because that is additional capital to underpin lending that our economy badly needs.”
    - remains to be seen, so far “pre-tax profit jumped from £1.3bn to £2.5bn. It's that surge that was responsible for Barclays paying out record bonuses of £2.7bn”
    If there was ever a case for the Volcker rule, curbing depository institutions from doing proprietary trading, there you have it. Traders using largely taxpayers' money, they use and taxpayers lose. What they win they pay themselves out as bonuses.
    That, and the greed I mentioned before, it's sickening. But more worrisome is that nothing appears to be being done to safeguard the financial system from this kind of abuse, and after everything that’s happened (notice the finance industry supplicants coming out already).
    In the short term regulators ought to reply by imposing higher capital charges and closer supervision on trading in riskier exotic assets, especially those not traded on organized exchanges.

  • Comment number 58.

    Barclays - where do their profits come from?

    Current LIBOR 0.64125% (subsidised by BoE lending rate)

    Current IA E-savings rate - 0.1%

    Current Barclays unsecured loan rate - 10.9%

    Current Barclaycard Initial Ccard rate - 27.9% APR.

    It's not rocket surgery - and yet "the greatest minds of our time" are unable to see this.

    ...and the defense of "it's only that nasty investment banking division profitting from crisis" - goes up in smoke.

    IF THIS IS A MARKET - WHERE IS THE COMPETITION?

    Who is offering mortgages at 0.6%?

    Who is offering loans below 10%?

    Who is offering savings greater than 1%?

    NOBODY - IT'S A CARTEL

  • Comment number 59.

    Robert
    I've no problem with profit, just excessive or exploitative profit.
    Barclays Capital have made huge profits but exactly where has this been made?
    Is it the rise in asset values which requires little input from investment bankers who could just have sat back and collect their bonuses at the end of the year.
    Is it Investment banks charging too much for their ever so specialist and myserious services that ordinary mortals could never understand.
    Is there a lack of competition in Investment banking thus enabling banks to charge excessive fees and do companies employing them willing pay up because they don't understand either.
    Any simply answers for a simple reader.

  • Comment number 60.

    'I am not Robert Peston and I don't bring you the business stories that matter!'

    Rp - no-one gives a four ex about Barclays or any other bank

    GC

  • Comment number 61.

    It doesn't matter how you look at it, bankers bonuses are generated from a slice of the real economies' earnings. Banking itself generates ZERO REAL wealth. Every pound note can be traced back to a thin slice of some real wealth creating work somewhere else like farming, manufacturing etc. The bonuses thus represent a parasitic growth on real wealth generation.

    This leaching of others earnings has become institutionalised within a framework created be governments, who set the rules, boundaries and structures that allow it to happen.

    I'd like to see the underlying structures changed to make the slice smaller. This can be done by limiting risk taking, and taxation measures to ensure that the population get to keep more of their own earnings and the products of their sweat and toil.

    For Barclays, I'd normally shrug and say that its a private company, they can do what they want, but the "too big to fail" factor overrides that. So I think they need to be taxed heavily and the money diverted to a contingency fund... a sort of "Bankers National Insurance" to protect depositors if...or when...they fail.



  • Comment number 62.

    All the problems mentioned above, whether it be families living beyond their means, or companies overcompensating staff or ever-riskier investments being made...they all stem from an ultimately destructive trend to "perform" within shorter and shorter time-frames. Instead of reaping the benefits over the course of years of dedication to a career, or watching our capital grow in value over time, we want it all now without giving heed to the cost to ourselves, our society or environment.

    The same goes for the political class, whose modus operandi (even now) is set to the quick metronomic beat of media news schedules. No longer do we have the capacity to take difficult decisions for the country's long-term benefit; that just doesn't fit with the "what-I-can-do-to-make-me/us-look-good-now" philosophy that drives the spin machine.

    It is no coincidence that politics and finance colluded in our latest debacle: they both ran to the same short-term agendas. The electorate, investors and shareholders went along with it as long as they were sat on the bandwagon. We have all been proverbial lemmings to a greater or lesser extent.

    The calls for changes to structures and practices in the financial industry will -- I believe -- endure. But while hiving departments off might seem to be a good thing, if the predominant activity remains short-term in focus then risky over-leveraging to achieve high returns will come back to haunt us again. It's easy to tick boxes and keep regulators happy for another month. Quite another thing to grow moral fibre where little or none exists.

    PS:

    25. At 12:52pm on 16 Feb 2010, writingsonthewall: "The continual questioning of bakers bonuses is a sign of change as we speak."

    I agree -- they should be sliced! I really don't think they know which side their bread is buttered on.....

  • Comment number 63.

    14. At 12:30pm on 16 Feb 2010, writingsonthewall wrote:
    Invite me on the TV and I will show you how to interview a banker - as I work in this industry I know the questions they don't want to be asked...
    ----------------------

    Come on, Robert, be a man, invite WOTW!

    And a question to WOTW:
    If you work in the banking industry you must too benefit from the profits it makes yet you're the most vocal critique. Isn't that a double standard?

  • Comment number 64.

    The paradox is that income inequality actually benefits the government. They can tax one person earning £1million at 40% giving roughly £400,000 tax paid whereas if this money was distributed among 40 people on an average income of £25k the tax would be £4k. 40 x £4k = £160,000 in tax revenues.

    This represents a 'loss' of £240,000 in tax revenue for the exchequer. This will definitely be at the forefront of their minds when decided whether to act on the banking system.

  • Comment number 65.

    47. At 1:29pm on 16 Feb 2010, yam yzf

    Absolute misguided fantasy.

    "Barclays have made a profit - well done to a UK company."
    ...as did all the banks make profit during the boom - well done them - until we discovered they had taken profit then only to sustain crippling loses which we had to fill.

    "Barclays have paid bonuses to their employees thus exercising their fundamental right to chose how to run their business"
    Rights for businesses? - rights are for humans - don't get confused.

    "Averages do not tell the story - I am sure the cleaner did not get the average"
    I have never met a cleaner on a bonus - what do you get extra cash for polishing the toilet bowl so it's finger touch clean?

    "Barclays avoided taking Govt money - surely that is a good thing for us all"
    All based on the assumption they will not need some on the future. Greggs didn't require a bailout - did their staff get mega bonuses? - should we all be grateful?

    "The bonuses paid will filter through to the wider economy whether it is from a car salesman or an airline pilot"
    ...not if the bankers are worried about future income - it's looking like the party is over - would you be blowing your bonus?
    - also by that argument we should all get multi-million pound bonuses we can all spend 'helping the Economy' - and then the monetarist idiots would be sooooo impressed with the velocity of money and think we're growing as a result!!!

    "What I do not understand from those who say 'anyone can do this', including the so called 'experts', is why they haven't? Did they buy bank shares at their low and make a profit from this? Did they borrow money and then lend it to others?"

    ...when did most banks start? last year? 10 years ago - or actually over a hundred years ago
    Even the 'newbies' are simply regurgitation of old ones - JP Morgan was around during the last great depression - were the 'experts' allowing them to buy into distressed assets?

    "Perhaps there are so many who know how to make money that we can expect to see a vast increase in the number of financial companies in the next year."

    ...and of course you're ignoring the prohibitive cost of it all - the expected increase in difficulty in a tighter regulatory environment - oh and of course Richard Branson is struggling to achieve this so what hope is there for the rest of us mere mortals.

    All your suggestions are based on there being a level playing field - which of course it isn't.

    Free market economics only seems to stretch back the last 30 years or so - most of the monopolies in the world were formed much longer ago than that.

  • Comment number 66.

    50. At 1:35pm on 16 Feb 2010, danj180

    Thank you for refreshing the memories - it's true the Protium spin off was simply hiding the bad news..

  • Comment number 67.

    62. At 1:58pm on 16 Feb 2010, towerofbabble wrote:

    "It is no coincidence that politics and finance colluded in our latest debacle: they both ran to the same short-term agendas. The electorate, investors and shareholders went along with it as long as they were sat on the bandwagon. We have all been proverbial lemmings to a greater or lesser extent."

    I agree absolutely. Great point.

    David Einhorn a US hedge fund manager also made this point in a speech he made Oct 19 2009

    see quotes below...

    'Winston Churchill said that, “Democracy is the worst form of government except for all the others that have been tried from time to time.”

    As I see it, there are two basic problems in how we have designed our government. The first is that officials favor policies with short-term impact over those in our long-term interest because they need to be popular while they are in office and they want to be reelected. In recent times, opinion tracking polls, the immediate reactions of focus groups, the 24/7 news cycle, the constant campaign, and the moment-to-moment obsession with the Dow Jones Industrial Average have magnified the political pressures to favor short-term solutions. Earlier this year, the political topic du jour was to debate whether the stimulus was working, before it had even been spent.

    Paul Volcker was an unusual public official because he was willing to make unpopular decisions in the early ’80s and was disliked at the time. History, though, judges him kindly for the era of prosperity that followed.

    Presently, Ben Bernanke and Tim Geithner have become the quintessential short-term decision makers. They explicitly “do whatever it takes” to “solve one problem at a time” and deal with the unintended consequences later. It is too soon for history to evaluate their work,
    because there hasn’t been time for the unintended consequences of the “do whatever it takes” decision-making to materialize.'

    check out the full speech - if you google it you should be able to find the pdf

  • Comment number 68.

    I blame weak Govt. at the height of the crisis in that it could have imposed limitations on the use of the bailout money at that point. The terms of the agreements of course are hidden.

    Norms: I'm afraid it's a case of what's good for the goose is good for the gander (aka MPs expenses, bankers pay). In both cases it's driven by an abundance of money (from the tax payer) and an increasing detachment from other sectors of society, such that both see nothing immoral in their pay or their increasing isolation from the rest of society. I'd like to think that those who earn such amounts to contribute to those less fortunate in society and keep in touch with their values. There have always been rich and poor, never more so than now perhaps, but alot of those wealthy people say in Victorian times had strong moral character and were philanthropists, benefitted the greater part of society by they moral attitude to others. Morally, bankers could learn alot from such examples, you can't take it with you so why not leave a good legacy rather than bad, that your name be remembered for good not bad.

  • Comment number 69.

    Bank's responsibility for our position, the "attributes" of the profits and the bonuses are all pretty much irrelevant and history.
    The real questions I want answered are as follows:
    Given what has happened in the last 3 years, how can an institution that takes deposits from the public be allowed to own an investment banking arm?
    If we all agree that the banks are to big to fail ... why are we not, at the very least, minimising the risk of failure?
    What are our main retail Banks (Lloyds, HSBC, Barclays, RBS) doing with Investment Banking arms, exchanges, brokerage arms?

    Barclays has clearly benefited from the bail out of the financial system - whether it be the ridiculously cheap funding, the lack of competitors or the immoral retail and corporate margins they are allowed to get away with. There can be no question of this.
    To my mind the only question is whether, like Lloyds & RBS, they (Barclays) should be partially nationalised, broken down to a reasonable retail / corporate outfit and then used in and as a part of a "re-build" of the finances of society.

  • Comment number 70.

    No Bank should be paying bonuses to the directors until their pension funds are out of defecit. This would inspire the top bods as never before.

  • Comment number 71.

    WOTW- Please run for Prime Minister in the forthcoming general election, I will vote for you.

  • Comment number 72.

    Whether we like it or not we are in an emergency situation.
    Hopefully the government, its' advisors and the BOE have now seen the madness of what happened in the crazy years of 2002 to 2007.
    So the "super-friendly" banking conditions we now have should make big profits really easy to get......that was the whole idea.
    And banking has always been a slightly risky business....more debt disasters are still looming.
    The public bail-out saved the necks of ALL banks, whether in the UK or the USA, or elsewhere.
    Should they be paying bonuses.....to my mind, yes.....but let's live in the real world, and not use "Monopoly money". Keep those bonuses in line with the rest of society, and don't behave like leeches.
    City-fuelled greed....lethally damaging to the economy and to public finances.
    We are stuck with these banks.....they now need genuine profits and plenty of reserve capital, but they must no longer stuff all the goodies in their pockets.

  • Comment number 73.

    Who cares how much Investment Bankers get paid?

    When you transfer massive wealth from poor to rich you get effects showing up in velocity of money figures - it slows down materially. This hampers economic recovery and nullifies the effects of policy responses.

    As a point of fact the anti capitalists are not necessarily those who question the need for such profits but the communist/anarchist wreckers in receipt of such massive largesse.

    Just because they pay PR outfits (seemingly including the BBC) to spin a happy story of their own supreme intelligence does not detract from the fact that British banks are controlled by a bunch of anti capitalist system wreckers.

    Therefore people like writingsonthewall are wrong. They should be urging ever larger bonuses. The bigger the bonuses the faster the system grinds to a halt. All known in mainstream economic theory and all entirely non controversial.


  • Comment number 74.

    # 10. At 12:10pm on 16 Feb 2010, notabankerbasher wrote:

    > I think all this banker bashing is pointless!

    Nonsense - it's great fun. There are a lot of votes out there waiting
    for the first politician to grab. All he/she has to do is get out
    a big club, and really bash down some bankers. There's an election
    coming up - who will be the first to strike them down? 90% tax, I say!!!




  • Comment number 75.

    The bank has lost profit in retail banking because it betrayed the customers and lost a good deal of their retirement funds. How all the government money worked in and out will be hard to determine as neither the bank nor the government is prone to honesty. There is the world of banking, which we all learned is disconnected from the world of everyone else, and our world. What we do know is that the banks and their governmental handmaidens created a house of cards that fell on the people but not the banks. Everyone lost money but the big banks, they dumped their bad assests on the public and went about their business free from any charges related to their unethical and unprofessional behaviors. We are supposed to feel good because the bank is doing well? That is like feeling good that the criminal who robbed your home got a good price for your items he sold.

  • Comment number 76.

    52. At 1:37pm on 16 Feb 2010, SteveB

    With that blinding logic I bet you're well pleased when you buy back the goods stolen from your house by burgalars at the car boot sale - because you got them for a steal!

    The banks may be paying (some) tax - but it's miniscule compared to the tax loss incurred by this country over the last 2 years - never mind the bailout money - the tax receipts have collapsed because businesses are going bust up and down the country - why? oh yes, lack of credit brought on by wild speculation......by banks no less.

    I'm sure Mr Bender who owns my local newsagent will be thrilled to hear that money will be rushing in soon as bankers 'splash their cash' on wispa bars and magazines.

  • Comment number 77.

    "Barclays remains in the too-big-to-fail club that means it would always be bailed out by taxpayers"
    don't bet your life on it. Sooner or later the appropriate Laws of Physics will take effect - i.e. one that roughly translates as "The higher it goes the harder it falls" and another, "Nothing is certain in this world but death and taxes".

  • Comment number 78.

    WOTW so many comment so little facts. And yes my economic and history books go back more than 20 years.

    1. Govts are just as responsible as banks for the mess. Did the banks insist on mark to market accounting - no, they warned at the time this would lead to volatility. Did banks pass (in US) the community re-investment act which obligated banks to make loans to communities that previously they thought were too risky? Was it the banks or the govt in the UK that spend 5 years before recession borrowing ever greater amounts and spending an ever greater proportion of national income in the public sector? Until you can accept that the banks are not the only people responsible for the mess we are in then you are not looking at the same world I am.

    2, Markets never care about people because markets are by definition amoral, only people can be moral or immoral. You spend all your time complaining about banks taking advantage yet this happens every day in the real world for millions of people and has nothing to do with banks. It is human nature, people take advantage of others whether you are taking the banking market the property market or the widget manufacture industry.

    3. Yes I do advocate that if we have a banking system where some banks benefit from a govt guarantee to depositors (and pay for it) and others do not then if the bank that does not gets into trouble it must be allowed to go bust and depositors lose - they made a choice to go with a bank without a govt guarantee.

    4. As for your comments on how easy it is to make money with borrowing rates being so low and lending rates so high you clearly have never understood banking - given that many bankers did not understand it either is there any chance you work for Lloyds or RBS? The cost to a bank of borrowing money is only one factor in the interest rate that the bank charges for lending - other factors include regulatory costs, running costs, competition and crucially the risk of getting the money back. Of course credit card rates are high because the risk of default is very high at the moment. It may surprise you but banking in the UK is very competitive in all sectors with the possible exception of loans to small businesses. There are 100s of different mortgages provided by many financial institutions, loads of different institutions offering bank account deals it is not just limited to HBOS/Lloyds RBS Group HSBC and Barclays. I bank with the Co-op in the past had mortgages with Alliance & Leicester, Norwich and Peterborough, accounts with Nationwide. But I could equally have gone with NatWest, 50 other different mortgage providers and 100+ savings account providers. Complaining it is a monopoly (or possibly an oligopoly) does not match the reality

  • Comment number 79.

    The figures annouced by Barclays is rubbing it in that they are seeing off thousands of UK individuals. As illustrated by WOTW they are over charging. The Government allows this scam to continue, whilst the savers are being disadvantaged as their savings devalue!

    Barclays profits has come at others misfortune, by way of shorting, overcharging for credit and offering a poor return on cash.

    The base rate should go up, accompanied with explicit regulation to stop the banks raising loan/mortgage rates - i.e. reduce the spread!

    As the banks are not responsible enough, then a much heavier hand is needed in how they operate. I was employed by a high street bank(2004) and I was absolutely disgusted by the amount of credit contracts sold where the applicants details were fudged just to get the system to accept.

  • Comment number 80.

    P.S. to No 77

    Might have known that Lehman or its ilk would figure in the current witches brew being cooked up by Barclays. When will we learn " a long spoon is needed when you sup with the devil"

  • Comment number 81.

    63. At 1:59pm on 16 Feb 2010, plamski wrote:

    "If you work in the banking industry you must too benefit from the profits it makes yet you're the most vocal critique. Isn't that a double standard?"

    Possibly, but actually I am a rat, a grass, a tell tale etc. What I tell you will amount to my own downfall (I am well aware of that) - but the sacrifice I will have to make financially is a pittance to the sacrifice millions of 'innocent taxpayers' are going to be asked to make next April. As you can probably imagine, whilst I am well paid, the sacrifice I will have to make is much smaller than say Bob Diamond.
    I also have the advantage of not being a 'one trick pony' so when finance collapses I'll be just as happy in any other industry (unlike your average banker)

    I am always surprised how many people come on this blog and defend banks/ bankers and finance in general - who clearly have never worked in the city (i'm not directing that at you plamski)

    There are 2 types of people in the city, those who admit it's a scam and those who won't. Nobody is under any illusion that it's not a giant pyramid / ponzi scheme. Some have convinced themselves it will rectify itself and the rest of us are resigned to the fact it will fail - and possibly soon.

    They will come on here and bluff their way through reasoning with illogical responses which don't even bare the slightest scrutiny - but our journalists seem unable to grasp this.

    I can only conclude they are conspiring to fraud the nation - again.

  • Comment number 82.

    Yes, a big part of these bonuses are not justified. I don't understand why but there is market failure in this industry and that has consistently manifested itself in overly high levels of banker pay. People should stop wasting their time whining about it.
    All the authorities can do is correct the obvious mistakes that led to the banking crisis - higher capital ratios, eliminating the too big to fail issue, more transparency, smarter regulation, better compensation structures etc - and charge the banks an annual levy to help pay for the costs of the clean up. I suspect that after all this, banker bonuses will still be excessive and unacceptable to many people. But thats what sometimes happens in a capitalist system - unfairness. And if the bankers' pay upsets some people that much why not try it out for yourselves? In my experience of it, no amount of money is enough to offset the pain.

  • Comment number 83.

    71. At 2:44pm on 16 Feb 2010, Treading Water wrote:

    "WOTW- Please run for Prime Minister in the forthcoming general election, I will vote for you."

    If voting changed anything they would have banned it.

    The time for voting is over - we voted and voted and voted and nothing changed - all parties follow the same self interested path which leads to inevitable conflict.

    Watch Greece carfully, it's a sign of things to come....

  • Comment number 84.

    No bonuses.

    Lets all move our current accounts from Barclays to the banks who pay the least bonuses.

  • Comment number 85.

    19. At 12:40pm on 16 Feb 2010, writingsonthewall wrote:

    "...and why do Governments have the mandate to take action on the Economy? - Ah yes, that would be because in the past they have had to create institutions like the Fed and BoE to save the collapsing system - did we forget that Justin150, or do your history books only contain the last 20 years?"

    WOTW you don't half rant but your history is WRONG. The BofE wasn't set up to ensure the economy didn't collapse, it was set up so we could build a big Navy in the 17th Century to compete with and ultimately surpass the Spanish and French. Seemed to have worked till Brown took over.

    As to your view of your own profession, I would prefer these Bankers to be earning shed loads of money here ( and hopefully paying taxes here) rather than decamping to Geneva, where the Swiss would welcome their abilities, unlike you.

    Incidentally if you did appear on TV I am sure your efforts to cross examine your own profession would result in a P45!

  • Comment number 86.

    73. At 3:40pm on 16 Feb 2010, armagediontimes

    "Therefore people like writingsonthewall are wrong. They should be urging ever larger bonuses. The bigger the bonuses the faster the system grinds to a halt. All known in mainstream economic theory and all entirely non controversial."

    Alas, this is something I have already considered carefully and therefore cannot be accused of being wrong. You are right, that if you believe Marx's theory then to bring on the inevitable downfall of Capitalism you should play it faster and harder, the rawer, the better.

    However if you carefully read Marx he describes a downfall which will set human progress back years, massive panic, hunger and waste.

    As an intelligent human being I have realised that it would be better to recognise this inevitability and pre-empt the downfall so you retain an amount of control.

    Your version will result in chaos, war, genocide, the possibility of Fascist forces etc. - not pretty.

    However I do also concur that revolution cannot be 'forced' - it must come from the will of the people - the Bolsheviks tried to force it - and look how that turned out.

    All I can do is make sure the people are fully aware of the truth and are not misled by forces who wish to retain their unjustifiable power.

    If that is truly a 'mainstream economic idea' - then again it demonstrates how theory is being put before humanity - just as the recession is evidence of this.

    "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system."

    ...and no consequence for the humans involved in the liquidation.

  • Comment number 87.

    74. At 3:42pm on 16 Feb 2010, Jacques Cartier

    Isn't it amusing - they think this is bashing?

    This is merely tenderising the meat for some real bashing when they come crawling for another bailout....

  • Comment number 88.

    In many respects I understand the need for payment of bonuses. However, what I am not so happy about is that the Bank has seemingly forgotten its legion of small and perhaps large shareholders! We are the people who have invested our hard earned cash into this bank and yet we fall way down the pecking order. Come on Mr Varley, surely you must realise that there are quite alot of us out there, who rely on your dividends to supplement our income but you treat us as a body not worth mentioning when potentially we have risked our hard earned savings to make you into the Bank that you want to be. What comfort are you going to give to your loyal band of shareholders. thanks.

  • Comment number 89.

    re 76

    my point is just we are where we are so would HMRC rather have somewhere between 25 and 30% of the bonus money or 50 plus percent?
    Ok so mr corner shop isn't going to sell boat loads of wispa bars as a result but mr car salesperson is going to keep his job so the ripple down effect has got to be better than neutral.
    would it be better that we tax at 90-100% and give all the money to HMRC? i'm not sure that that particular route would have either mr corner shop or mr car salesperson still in a job or with a viable business.
    ok so the majority have a real axe to grind re the banks but given we are where we are at least there are signs of cash moving around the economy (although i admit not reaching everyone) which has to be better than 6-12 months ago.

  • Comment number 90.

    78. At 4:16pm on 16 Feb 2010, Justin150

    1) Whilst public spending rose, it was dwarfed by the increase in private sector (household) debt - which unless you haven't had a mortgage lately - was driven by commission sales. The mistake Government made was that they didn't account for having to bailout the entire banking system (I mean how short sighted of them!!)
    If the bailout didn't occur public debt levels wouldn't even be being mentioned right now - it's a red herring.

    2) "It is human nature, people take advantage of others "
    Don't confuse your morals with 'human nature'.

    3) ...and that would be open and available information to all customers looking for a bank so they can make an informed choice - just as the revelation that HBOS invested heavily in an unregulated CDO market and every HBOS customer knew that and the risks involved - right?

    4) Back to the same old story - I'm sure I've told you all this before - you must have a very poor memory.

    Risk - who 'prices' risk? - the markets? - not been doing to good a job with that lately now have they? What do you mean they completely mis-priced the risk of BILLIONS of pounds worth of investments? - surely the market can never be wrong?
    Sure the risk of default is high - that's because people are losing their jobs and businesses because the credit line was cut by the failing banks.

    For all those banks you listed, you find me more than 1% difference in the rates on offer. We've all had mortgages from different providers, don't think your special on that front - I said it was a cartel (and in case you need to check up - that's where market participant collude to create a monopolistic environment).

    Of that grand list you made of providers - it will be much smaller now (in case you haven't got up to speed, many banks went bust - about 2008) further exasperating the situation.

    I can only assume you are profitting from this situation - because nobody would put up such a bizarre defence unless they were.

  • Comment number 91.

    74. At 3:42pm on 16 Feb 2010, Jacques Cartier wrote:
    Nonsense - it's great fun. There are a lot of votes out there waiting
    for the first politician to grab. All he/she has to do is get out
    a big club, and really bash down some bankers. There's an election
    coming up - who will be the first to strike them down? 90% tax, I say!!!


    I'm holding out for 90.005% myself + RobinHoodTax. And no tax dodging of any kind to be allowed either.

  • Comment number 92.

    #29. writingsonthewall wrote:

    "...and is this a sign of that Hyperinflation?

    https://news.bbc.co.uk/1/hi/business/8517156.stm"

    There is no danger of hyperinflation, nor even of persistent high inflation.

    The blip in the inflation rate is due to a combination of the weak exchange rate, higher petrol prices and businesses passing on the January increase in VAT. But things will soon be back on track - plenty of spare capacity and the weak pace of the recovery suggest very strongly that inflation will undershoot the target once these transitory factors drop out of the calculation.

    For a banker (if that's really what you are) you appear to be peculiarly poorly-informed about the way the economy works.

  • Comment number 93.

    #17. At 12:38pm on 16 Feb 2010, Crookwood wrote:

    “This is all legal, but demonstrates that we the country, probably get more tax revenue from what it pays it's employees than what it actually pays as a corporation.”

    In 2007, from the financial services sector as a whole, employment related taxes (employer and employee NIC and PAYE) compared to other taxes in the sector as follows:

    Employment related taxes: £25.7bn
    Non-employment taxes: £26.8bn

    So I suppose it could be argued that taxwise, a bit more is paid by the financial services sector than by its employees.

    These figures do not take into account the taxation of dividends paid by the banks or other taxes paid by their employees – in particular, VAT and non PAYE income tax. I suspect that taking these things into account would probably tip the balance so more tax is paid by the employees than the employers.

    However, I don’t think this is altogether unusual. In 2008, income tax alone was £147bn, compared to only £43bn of corporation tax, so without factoring in all the other taxes paid by individuals, it seems highly likely that HMRC gets more tax from employees than it does from employers.



    “Corps like Barclays try very hard not to pay tax, using methods that most normal folk wouldn't have access to, or be able to use.
    So perhaps we're not too different from our Greek non-tax paying neigbours?”

    HMRC’s own estimates of the “tax gap” (which includes both evasion and legal avoidance) in 2009 are as follows:

    VAT: £11.5bn
    Other indirect: £3.2bn (e.g. cigs, petrol etc)
    Personal taxes: £15.8bn (income tax, CGT etc)
    Avoidance by very large businesses: £3.1bn
    Other corporation tax: £5.8bn
    Other: £1.8bn

    This would suggest that the majority of the tax gap comes not from banks avoidance (which would fall into ‘avoidance by very large businesses’) but from individuals not paying VAT and income taxes.

    ===============================
    #32. At 12:57pm on 16 Feb 2010, Horned_Devil wrote:

    “I am assuing that you have picked up those figures from the accounts? If so it won't include PAYE/NI in that figure as effectively the employee pays that not the company (other than Employees NI) and that figure will be buried elsewhere. It will also, more than likely, have elements of deferred tax and other accounting adjustments and won't represent the amount paid to HMRC in total for the bank”

    You are correct on all counts - and of course, they don’t distinguish UK tax from foreign taxes.

    The other figures in this post came from a PWC study for the Corporation of London (which is available on the corporation website), which is designed to estimate the whole range of UK taxes actually paid by the sector and its employees.

    ===========================
    39. At 1:08pm on 16 Feb 2010, John_from_Hendon wrote:

    “I would also add that the way that banks create their accounts under GAAP allows them to hide profits very easily in reserves and in reality a banks profits before appropriations to reserves are generally quite a bit higher.”

    GAAP provisioning is common in most jurisdictions. However, it is substantially harder to get a tax deduction for such provisions in the UK than in other European jurisdictions, which reduces the incentive to over-provide.


    “So in summary: it is probably true that Barclays is not paying its fair share of tax to the UK, as if they were any other citizen let alone the beneficiary of bail outs of the global banking system.”

    I suspect that fairness is a subjective matter, but see the HMRC tax gap figures above.

  • Comment number 94.

    #58. writingsonthewall wrote:

    "IF THIS IS A MARKET - WHERE IS THE COMPETITION?

    Who is offering loans below 10%?

    Who is offering savings greater than 1%?

    NOBODY - IT'S A CARTEL"

    Wrong again.

    Several banks are offering personal loans at well under 10% (there's an advert for Nationwide in today's press, offering loans at 7.9%), and it's pretty easy to get a return of over 1% on savings. My new Nationwide ISA is paying 4%, for example.

    Your uninformed, angry rants are not really adding anything to the debate.

  • Comment number 95.

    83no. WOTW

    Revolution!!!

  • Comment number 96.

    85. At 4:51pm on 16 Feb 2010, dontmakeawave wrote:

    "WOTW you don't half rant but your history is WRONG. The BofE wasn't set up to ensure the economy didn't collapse, it was set up so we could build a big Navy in the 17th Century to compete with and ultimately surpass the Spanish and French. Seemed to have worked till Brown took over."

    - and the Fed? when was that set up and why? Look up the panic of 1907. It's hillarious that your history goes back less than 20 years - don't you remember the role of the central bank (not independent then) by the Tory Government in the 80's?

    "As to your view of your own profession, I would prefer these Bankers to be earning shed loads of money here ( and hopefully paying taxes here) rather than decamping to Geneva, where the Swiss would welcome their abilities, unlike you."

    Bye, bye, bye - I can see city Airport from here and not one has left the country. They can all go as far as I am concerned - unlike you I know they could all be replaced with a set of 4 year old girls.

    (I'll dig out the link when I find it)

    "Incidentally if you did appear on TV I am sure your efforts to cross examine your own profession would result in a P45!"

    That wouldn't concern me in the slightest - morals and values are far greater assets than any monetary amount. Oh but you don't get that do you?

  • Comment number 97.

    Where does all this money come from? Correct me if I'm wrong, but it's a result of their own trading and them skimming off other peoples transactions. In any trade there will be a winner and a loser, so who is losing out to Barclays? I suspect it is in large part the pension funds (but I would really value an expert opinion on this... on who actually pays the bankers. After all, the money does just majoically appear out of nothing).
    One of my major concerns is the effect this is having on society. I'm pretty sure all these recently strike actions is because the finance sector has made everybody else feel like they are getting a raw deal.
    Bankers make this kind of money because they work with money, but what they do has a negative impact on the rest of us, even if they are successful. I don't doubt that there are some very talented and intelligent people working in the city, so wouldn't it be great if we could incentivize them to do something that benefits us all, rather than skimming off society?

  • Comment number 98.

    #86 writingsonthewall. It is not my version, I am neither asking for nor receiving multi $ million bonuses. Neither am I particularly dedicated to overthrowing the system.

    I merely point out that those who claim to be "of the system" and who extol its virtues and benefits are in fact the same people who are acting so as to ensure its downfall.

    I also try to differentiate reality from delusion and fact from fiction, in a last hope that this can save us from the war, genocide, chaos and destruction that your Great Leader foresaw.

    I am not hopeful, but am aware of the need to persist beyond the point where hope has been extinguished.

  • Comment number 99.

    What is a Meritocracy? How do you decide how much someone deserves to be paid for the contribution they make?
    The problems with the financial system really lie with the respective stewards of our economic systems the various governments and their regulatory agents who are elected with the role of ensuring the system does not fall down. This was unquestionably a system failure, and therefore the majority of the blame falls with these institutions. The facts remain that, mostly, the financial institutons did not break any laws or contevene any agreed regulations, they played by the rules.
    As long as we have an economic system that involves individual governments determining the value and volume of money in an economy we are always going to have these problems with asset bubles, an unequal distibution of wealth and a bias towards those businesses involved in the financial sector retaining a disproportionate amount of overall wealth. The question remains, should we change the system, and if so to what??

  • Comment number 100.

    BBC News 6pm.

    Once again the report is all about profits and bonuses.
    No wonder the public perception is of banks just in it for themselves.

    What about the other side of the story, Robert? These are 'pre-tax' profits! The banks pay billions of tax into the Treasury; that goes to pay for schools, hospitals etc.

    How about aome balance?




 

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