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)

They never have to pay back any of their bonuses due to the fallout of that profit making though. Privatise the profits, socialise the costs.

@Stressedout1009 and @TheKeatingFive,

It really isn’t quite like that.

Investment bankers do work very hard and do get very stressed but, ultimately, a lot of it is self-inflicted and many are stress addicts.

There is A LOT of luck in investment banking. If you make a few good bets as a trader, you can walk away with several hundred thousand pounds at the end of the year. In M&A, one big FD likes your proposal and you get to advise on the deal, you are a ‘rainmaker’ and, again, get immensely rewarded.

There is good research suggesting that the most successful bankers are far from the best, as the best can see the downsides and tend to be less aggressive.

My DH and loads of these comments from his siblings. Obviously they all had the same background and education but he went to university as a mature student, took a risk and moved to London with no money, just student debt. Now they constantly talk about bankers bonuses. It does seem like sour grapes as he earns 10 to 20 times more than them. If it was that easy then why didn’t they do it?

@CrimbleCrumble1,

Connections and luck.

Certain backgrounds are favoured, and the right work experience.

But, ultimately, some banks will get hundreds of very similar graduate applications for a few positions. They will also mostly interview pretty similarly.

You have to select 5 out of the, say, 400 applicants, so you do rounds of interviews, but it is really hard to judge (very similar) people.

So, 5 win the lottery and get to be graduate trainees. They work hard and show a good attitude and, a few years down the line, they are rich.

They are not idiots (obviously) but neither are they super talented. On the whole, they are very ambitious and competent people who got lucky.

It is part of human psyche to think that because they made a lot of money, they are immensely talented.

Bankers have very little job security though. I gather at Goldman Sachs the bottom 10% of traders get axed every single year.

I think it's a great job, I'd encourage my kids to do it if they had a thick enough skin.

CrimbleCrumble1 it’s pretty simple your DH is more clever, has more qualifications and took more risks. Same as my DH. People commenting on this thread couldn’t understand the front page of the FT. There is no easy money, it’s skip the parties, study hard, sit exams, university, chartered accountant, business school, treasury exam, then 30 years hard work and yeah you get a bonus. What a shocker.

TheReluctantPhoenix no connections here. Just brains, hard work and long hours.

It's not sour grapes @CrimbleCrumble1 and we have lots of understanding @GreenLimes . It's just obscene and actually, wrong.

People complaining about '08... yes huge bonuses then probably an issues. Subprime lending would have gone on in the early 2000s. The bankers now are different people. They are not the people who crashed the economy. Also you know the financial services industry does FINANCE our economy. I see no issue.

Study well, get a good job in finance. Work brutal hours. They deserve their pay. Or would you complain about solicitor pay in magic circle firms? Or when software engineers in big tech firms get high pay?

@downtonabbeyfan1234,

Are you quite young? Of course the bankers of today are the same as those in 2008, many quite literally the same people. It was 14 years ago, not 140!

In fact the CDS swap, the ‘never again’ instrument that was the catalyst of the 2008 crash, is back to volumes very close to those seen in 2007.

Bankers don’t go into banking only motivated by money and the next bonus, many are genuinely interested in the ‘science’ of finance.
But, when pay is so short term and life changing, and people are literally defined by their ‘numbers’ (‘we must employ him, he is a £20 mio a year trader’), the incentives are only one way.

@TheReluctantPhoenix I thought the banks did the lending in the early 2000s.. with the crash happening in 08. I mean there have been graduates since that have gone into banking. Made money (and have not crashed the economy).

I'm sure on Mumsnet there are those who DC went to Oxbridge and then the city?

I will try to give you an analogy about why I believe banking is largely predatory (especially investment banking). It is imperfect, as all analogies are.

Now, most offices have plants, they need to be bought and looked after. There is some research that plants improve morale and productivity in businesses.

Now imagine a few clever people set themselves up as ‘business plant consultants’. They produced some (somewhat biased) research that not only having plants was important but the type of plant could be critical to the success of the business.

Now, the previously relatively minor role of plant buyer (aka finance director) became incredibly important. Plant consultants charged 10s of millions of pounds for plant advice and, on the back of that, were paid bonuses of millions of pounds, on the back of which they became huge tax payers.

It wasn’t enough to just have the right plants, as these could change, so plant consultants sold plant buyers claims on plants that might become important later. Some businesses made more from bets on plants than boring things like car sales (Porsche at one point in finance for instance) but others, making the wrong bets, lost their shareholders nearly everything (GE in the US).

Regardless of how companies actually did, more and more plant consultants were needed and this job became very desirable to our best minds. Potential genetics researchers decided to join plant consultants as the pay was so much better.

Finance is not as important as bankers would have you believe and bubbles are not harmless.

Footballers deserve their money more than bankers do IMO. At least some people get enjoyment from watching football.

I’m a complaint manager for a bank and I dislike when these articles come out around this time every year. The majority of ‘bankers’ ie bank staff on the front line you speak with in branch or by phone, are not highly paid. It’s a stressful job which anyone who works directly with the public on a daily basis in customer service will tell you. There’s also stats and targets that can be hard to meet. It’s ridiculous the crap we get off customers when these bonus pay articles come out every year. The investment bankers and people at the very top of the tree earn ridiculously high amounts via salary and bonus. The people the public spew their ill informed hate at do not. Writing to the CEO will get a response from someone much further down the chain who has no influence over staff bonus pay decisions. I remember reading an article a few years ago saying the average employee at the bank I work for was getting a £4000 bonus. The media calculations included the people at the top getting millions when the ones at the bottom got appx £400. Don’t believe everything you read.

I get a bonus monthly in my job as long as we hit our targets. I don't feel guilty about it. It's just what happens where I work. DH works for a bank and gets a yearly bonus. It's never anything crazy but it's helpful to us and he gets taxed a fair amount.

"Bankers" who get bonuses like this are generally people doing M&A deals. But yes finance is way better rewarded than many sectors. Nothing to stop anyone going for these careers. If as a society we want greater equality more people shoukd express this politically. Not just through biting but more people should get more actively involved in politics. Instead it's left to the few and the country is becoming increasingly right wing

And yet, we're still talking about the government bailing out U.K. investment banks. They didn't. My bonuses were not paid out of tax-payers' money. But I did pay half of them back in tax.

Making a lot of money isn't evil. Someone doesn't always have to lose out. I went into corporate finance from a state school education. As could others if they were willing to work their arses off and work in a highly pressured environment. We were told by our CEO that we'd be on the redundancy list if we weren't still at our desks at midnight.

And our economy would be rather screwed without the financial services sector.

And yet, we're still talking about the government bailing out U.K. investment banks. They didn't.

I think you’ll find they did.

en.wikipedia.org/wiki/2008_United_Kingdom_bank_rescue_package

And yet, we're still talking about the government bailing out U.K. investment banks.

Disingenious, Goverments across the world bailed out the banks and bonuses where paid, what a lot of people who will pick up on that don't want to admit is that if they didn't then the economy would have crashed and their personal situation would have gone to shit, the ven diagram of being aginst banking bonuses and wanting their house price to increase is almost a complete circle, they just cant see ironic situation they are in

Still waiting for the answer to, if it’s so easy why aren’t more people in investment banking?

I don't think it's easy at all. It's just not the kind of thing I would ever have been interested in, ethically speaking.

@TheKeatingFive

They don't actually produce anything, just move money around.

And that makes a lot of money.

What do you mean by 'produce something'? They produce profits. Again I think a capitalism 101 class is in order.

I think we all understand how capitalism works thanks very much.

Some of us might be a bit more critical as to how beneficial it actually is though, in its current form.

@sst1234

Still waiting for the answer to, if it’s so easy why aren’t more people in investment banking?

Presumably there's a limit to the number of people who can actually work in the sector?

@TheReluctantPhoenix

I will try to give you an analogy about why I believe banking is largely predatory (especially investment banking). It is imperfect, as all analogies are.

Now, most offices have plants, they need to be bought and looked after. There is some research that plants improve morale and productivity in businesses.

Now imagine a few clever people set themselves up as ‘business plant consultants’. They produced some (somewhat biased) research that not only having plants was important but the type of plant could be critical to the success of the business.

Now, the previously relatively minor role of plant buyer (aka finance director) became incredibly important. Plant consultants charged 10s of millions of pounds for plant advice and, on the back of that, were paid bonuses of millions of pounds, on the back of which they became huge tax payers.

It wasn’t enough to just have the right plants, as these could change, so plant consultants sold plant buyers claims on plants that might become important later. Some businesses made more from bets on plants than boring things like car sales (Porsche at one point in finance for instance) but others, making the wrong bets, lost their shareholders nearly everything (GE in the US).

Regardless of how companies actually did, more and more plant consultants were needed and this job became very desirable to our best minds. Potential genetics researchers decided to join plant consultants as the pay was so much better.

Finance is not as important as bankers would have you believe and bubbles are not harmless.

This only makes sense if you think that finance is unimportant commensurate to faffing about with plants (I realise you said it’s an imperfect analogy). It’s really not, though. Every company I work with is funded by… finance. I, and most people I know, have a mortgage. That’s finance. A PP was complaining about overdraft fees and I agree, but an overdraft is literally the bank lending you money… finance. Your pension… finance.

So, yeah, it’s not the same as plants in an office. Maybe more like electricity or wifi. An office (society) COULD work without it but only in a pretty backward way.

@MongoOnlyPawnInGameOfLife

And it clearly isn’t oversubscribed, based on the salaries and bonuses. So once again, if it’s so easy to earn bucks in investment banking, why are it more people choosing to go into that profession and earn tons of money for not working very hard.