To feel depressed and angry about Bankers Bonuses

[SapatSea]

Most people in the country are facing a cost of living crisis. We have had austerity for over a decade due to bailing out the banks and the "we're all in it together" mantra (lies). Although our GDP doesn't look too bad as a bald figure the GDP per person is falling year on year and the multiples of difference in salary/wealth between those at the bottom and top is ever widening. We are becoming a more and more divided society in terms of the have's and have's not.Most people are deeply worried about fuel bills and the future and then we have this
www.theguardian.com/business/2022/feb/16/weve-had-a-run-on-champagne-biggest-uk-banker-bonuses-since-financial-crash
barely reported by the MSM. It's obscene.

(I do realise that just a few months after the crash and bail out that bankers got bonuses again but this just really hurt reading it this morning)

Because UK taxpayers subsidise the banking failures - we are paying for their failure. If you aren’t a shareholder but are a taxpayer then you very much are a stakeholder.

It's true that this happened, once in living memory, as far as I know, but that doesn't mean individual bankers who had nothing to do with it should be paid less. Or even that the ones who are guilty should be paid less. If the government wants to recover money, it needs to get it from the banks, not their employees.

It is obscene but YABU. We live in a capitalist society which rewards those who shaft others and the accumulation of extreme wealth and “stuff” so I don’t know why people are surprised by this.

As someone has said, if it’s so piss easy then feel free to go and get a job trading then. As a 30+ year veteran of investment banking, I can assure you it’s not that easy. And you are most definitely not rewarded for failure. What is sometimes not understood is that it wasn’t bankers being baled out in isolation - the collapse of the banking industry would have been catastrophic for the country and everyone in it! The banks were bailed out to protect the population and the country itself. Heads rolled .. they continue to roll. The conduct of everyone in the industry is under intense scrutiny always - the conduct risk awareness now far surpasses most other industries. Yes, some bankers get eye watering bonuses - but they generate eye watering profits. The financial services industry is a colossal contributor to the overall wealth of the nation. Banking profits lead to higher dividend payouts of course to shareholders. Which by the way - pension funds make up a hefty proportion.

Yes the government bailed out the banks and let them away with murder, but ultimately the banks had a lot of power and knew it. The government needed to avert societal collapse. Their hand wasn't strong.

I sit on the sales desk but do the compliance part, even the juniors earn more than me because their bonuses are mad BUT I work 9-5, if they need me urgently, they can ring and I get stuff done if really needed but it's not often. They work 12-16h a day. I have children that I see, those men have children but they don't see them. A lot of them work incredibly hard are available 24/7. I wouldn't want that life/ wouldn't be able to sustain it without burning out. It's pressure, pressure & more pressure. They bring in the money for the bank, and get their cut. I personally don't think it's unfair.

On top of that, most of them are highly educated intelligent individuals. Our grads are the Creme de la Creme of the Russel group universities - how I ended up there, no clue. 🤣

The financial services industry is a colossal contributor to the overall wealth of the nation.

Indeed. In New York, about 20% of income tax receipts are from Wall Street salaries and bonuses. When financial services suffer, so do other taxpayers.

Just a tiny point - because of our geographic / time zone position , UK historically became a centre for banking / trading. It brings money into the country. I have a member of the family who did well for a while and then binned during the crash, had to sell his house. Well - OK no-one will shed tears . I would love to earn those bonuses - but unfortunately for me it tends to be for the better jobs you have to be very very good at maths (& I am not)

This is not to say that the skew of earnings between banking and other jobs is not untoward , but banking can be more precarious & for every person you hear of getting a huge bonus I'll bet a penny to a pound of oranges there are many of those who do not & have been summarily dismissed.

I am not saying it is fair but the UK economy does rely somewhat on the financial sector.

Please take this post in the spirit in which is intended - i.e. a balance

We had years where my DH got hardly any sleep because of really early morning calls from
Asia and late calls from New York. He climb into bed at 4am after working in our study and get up again at 5.30 to go back to the office. Hundreds of weekends were ruined, we’d be about to
watch a film at the cinema or have people over for lunch and the phone would ring. My DH would disappear for at least an hour. His blood pressure was and is still so high he’s on two types of medications. A couple of times a year they’d be cuts and he’d be shitting it that he’s be in the bottom 10% and lose his job. The pressure was incredible, any one fancy it?

@Whiskeywithwater

As someone has said, if it’s so piss easy then feel free to go and get a job trading then. As a 30+ year veteran of investment banking, I can assure you it’s not that easy. And you are most definitely not rewarded for failure. What is sometimes not understood is that it wasn’t bankers being baled out in isolation - the collapse of the banking industry would have been catastrophic for the country and everyone in it! The banks were bailed out to protect the population and the country itself. Heads rolled .. they continue to roll. The conduct of everyone in the industry is under intense scrutiny always - the conduct risk awareness now far surpasses most other industries. Yes, some bankers get eye watering bonuses - but they generate eye watering profits. The financial services industry is a colossal contributor to the overall wealth of the nation. Banking profits lead to higher dividend payouts of course to shareholders. Which by the way - pension funds make up a hefty proportion.

This witch hunt does my head in. Yes, some bankers get huge bonuses but they make huge sums. It's commission just on another level. The downside is, you don't make the sums needed to get the bonuses you're gone. Failure isn't an option.

The bail out, although on face value unpalatable, was absolutely necessary. A full system wide collapse would have caused unimaginable chaos. Want to pay for something? Good luck with that.

Can I ask, from your experiences, how many of bankers actually out earn the average premiership footballer or celebrity chef?

Then we come to tax. If people want the NHS/Education/Benefits/everything to be "properly funded" , then you need tax. I know they're not bankers but to generate the same level of tax as the Coates family you'd need around 250,000 full time minimum wage workers. Can't have it both ways.

@Whiskeywithwater

As someone has said, if it’s so piss easy then feel free to go and get a job trading then. As a 30+ year veteran of investment banking, I can assure you it’s not that easy. And you are most definitely not rewarded for failure. What is sometimes not understood is that it wasn’t bankers being baled out in isolation - the collapse of the banking industry would have been catastrophic for the country and everyone in it! The banks were bailed out to protect the population and the country itself. Heads rolled .. they continue to roll. The conduct of everyone in the industry is under intense scrutiny always - the conduct risk awareness now far surpasses most other industries. Yes, some bankers get eye watering bonuses - but they generate eye watering profits. The financial services industry is a colossal contributor to the overall wealth of the nation. Banking profits lead to higher dividend payouts of course to shareholders. Which by the way - pension funds make up a hefty proportion.

This. ALSO All the shareholders y’all are dissing? They’re not just nameless billionaires. Pension funds are also shareholders.

When you put money away in a pension it doesn’t just sit there only to be returned years later it’s invested etc to generate sufficient return!

The culture of these banks is something they could change. Instead of employing 10 workers on £150k and expecting them to work 18 hour days they could employ 15, either on a lower salary or by reducing their profits a smidge. They could adhere to the Working Time Directive. They could give their staff some job security. They could start family friendly policies. This could all be backed by the government legislating in support of these measures (without allowing opt-outs). It’s not inevitable and it’s frankly bonkers that they continue to treat staff like shit.

It's great isn't it? 'Rip off' benefits of a few 100 quid by doing a bit of cash in hand work, get caught, and get a criminal record, a custodial sentence (suspended if you're lucky,) and be forced to pay what you owe out of your remaining 'wealth.'

Rip off 50 million from the public - or taxpayer - and receive a massive bonus, and a platinum plated pension of £150K plus a year.

Ahhh, what a time to be alive!

Oh YANBU @SapatSea

DH works in the city for an American firm, he only gets a bonus after he has brought in his salary in fees plus his target fees for the year (eg £5 million). The only day of the year he doesn’t respond to calls or emails is Christmas Day. Meals are interrupted, sitting on the sofa watching tv is interrupted, he is expected to be available. He is up at 5 am 6 days a week and has worked abroad Monday - Friday for months at a time. He deals with huge multinationals and governments, hundreds of millions of £s, thousands of jobs at risk depending on decisions he is involved in. He is in his 50s now and only started to earn bonuses in the last few years. No inherited wealth or public school education, got a scholarship at sixth form at a grammar school. Tax he pays every year is literally streets of houses.

If you want a high salary, finance and law will do it but you are kidding yourself if you think it’s easy and you have to be clever and serious minded.

The government bailouts line is used as a catch-all for pretty much all financial institutions. The government bailed out a small number of retail, rather than principally investment, banks in the U.K. By no means the majority. (The US situation differed).

Our corporate finance department was advisory only (although part of an investment bank). We didn't act as principal for any debt or equity raising for clients. Directors were paid big bonuses if they brought in the requisite level of fees. The fees were a minuscule proportion of the overall transaction value. Hopefully their advice, in turn, generated shareholder and company value. Big bonuses don't have to be evil; our directors earned far more for the company than themselves.

There's nothing to stop people applying for jobs in investment banking if they want the same remuneration. It's a relentlessly tough environment with very little job security, but you're handsomely rewarded if you can cope with it.

The economy would have collapsed without the banks. We need them. Saving them cost us all. If you are bright, go and work in banking. It’s never right to defraud the state. Bankers pay for the benefits.,

Instead of employing 10 workers on £150k and expecting them to work 18 hour days they could employ 15, either on a lower salary or by reducing their profits a smidge. They could adhere to the Working Time Directive. They could give their staff some job security. They could start family friendly policies.

I'm not sure this demonstrates any understanding of the business and how it works. Clients want the best people and the best people rise to the top via their skill and putting in those long hours.

It's just not the type of business where you can work eight hours and skip merrily home, to be truly on top of things you need to know what's going on across the globe and that changes hour by hour.

YABU but I would say that, because I'm an investment banker and have been for the last 25yrs. In the late 90's, pre the crash, the salaries and bonuses were huge, it's true. I work at least 12hr days and have often been called back from holidays, DC were in childcare from 7am - 7pm, costing me £2.5k a month. It is a very cut throat environment, if you miss your target one year, you're out, if they have a bad year and need to make cuts, you're also out. I've been made redundant once and DH (FX trader), twice, it took him two years to find another job after the last one, as in general, the number of people working in IB has been slashed, as IT has taken over a lot of roles. I was summoned to HR and dismissed on the spot, I wasn't even allowed to return to my desk to collect my handbag.

Post the crash, base salaries haven't risen at all, not even inflationary. I got a 1% pay rise this year and that's OK, pay rises are going to other parts of the bank where the salaries are lower. That's the first pay rise I've had in years. Bonuses do make up a significant part of comp and they are driven by the bank's performance, your team's performance and your own performance. The stars need to align in all areas to get a 'bumper' bonus. The next year, regardless of your own performance, if the bank does badly, or your team does badly, you might get zero. I've watched an entire equity sales desk walk out because they got zeros. If you've done the job for a long time, you learn to never assume a bonus, you budget for zero and don't rely on them to pay school fees, or a chunk off your mortgage, but lots of them do and bonuses have been very lean (in banking terms) for the last 10y or so.

The fees were a minuscule proportion of the overall transaction value. Hopefully their advice, in turn, generated shareholder and company value.

I think this is the point that people may not grasp. If you're bringing in 7 figure sums for your company, it's not really feasible to pay you 80 grand. You're financial worth is far more than that and everyone knows it.

And not all the banks were bailed out - HSBC didn't take any cash, neither did Barclays.

Participating banks
The plan was open to all UK incorporated banks and all building societies, including the following: Abbey, Barclays, Clydesdale Bank, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, Royal Bank of Scotland, Standard Chartered Bank.[10]

However, of these, Abbey, Barclays, Clydesdale, HSBC, Nationwide, and Standard Chartered chose not to receive any government money,[19] leaving Lloyds and RBS as the only major recipients.

That’s the market rate. Shareholders get to decide what a company boss gets paid, not Joe public. If you want to get upset, please be upset about the waste in the public sector, the bad decisions they make with public funds and poor productivity that the leadership delivers.

@TooExtraImmatureCheddar

The culture of these banks is something they could change. Instead of employing 10 workers on £150k and expecting them to work 18 hour days they could employ 15, either on a lower salary or by reducing their profits a smidge. They could adhere to the Working Time Directive. They could give their staff some job security. They could start family friendly policies. This could all be backed by the government legislating in support of these measures (without allowing opt-outs). It’s not inevitable and it’s frankly bonkers that they continue to treat staff like shit.

It doesn't really work like that, thought, @TooExtraImmatureCheddar. My DH works in corporate finance and someone else can't simply take over at a certain time, he has a strategy and often makes minute-to-minute decisions. There's a 24-hour desk that monitors the overseas markets and things can change at any time. It's very high-pressure and I certainly couldn't handle it!

With regard to job security, the quick firings are mainly to do with proprietorial information. When someone's fired, they want them out of there ASAP. DH has witnessed people called into their manager's office, escorted to their desk to collect their things, then escorted out of the building.

Where would the money to pay these groups more come from? Taking all the bankers' bonuses would be a drop in the ocean.

Not really. Apparently bonuses at just the Big 4 were 4 billion. There are about 500,000 nurses. Divided out equally would be a bonus of 8k each I think. I imagine nurses would be quite happy with that.

I know it isn't just nurses. But there are also bonuses beyond the Big 4. The numbers are not tiny.

That wasn't a serious policy suggestion btw (and I know there is tax...) but I wanted to give a sense of scale.

I think the issue is bad decisions & mistakes are often also rewarded

Yes, like Fred the Shred. I wonder what’s happened to him. Obviously he’s unemployable but I guess his golden handshake and pension will allow him and his family to live in comfort for the rest of his days.
On the other hand being universally disliked and being stared at and insulted in the street is a punishment.