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)

I love a good clap me! i don't even work NHS...i work private so at least I don't have the 60 hour week my friend doing the same job in the nhs had the other week.

M&A seeks to create efficiency savings and synergistic gains. Generally, these look far better on the Excel spreadsheet than they turn out in real life.

If I think about the acquisitions I advised on, some were more value-enhancing than others. But that's far more the fault of the company than the advisers. I'd say 95% of acquisitions were identified by the client (despite more acquisition search presentations than I care to admit to). Yes, we'd help them value the company, project manage the transaction and do the financial modelling (based on their numbers). But the post-integration piece is the clients' alone.

I can think of plenty of examples where we advised clients not to undertake corporate transactions. One company wanted to IPO and invited a number of investment banks to present to them on strategic options. We didn't believe they should and gave a very honest presentation. It went down like a lead balloon. They did float, but a decade later.

There were also more aborted than completed transactions. Our retainer was tiny in comparison to our final value fee. Several disposal processes were stopped when the client wasn't happy with the level of offers. We agreed. Yes, everyone wants their fees but having integrity and putting your client first is more important for your reputation long-term.

Age old problem. In the hospital where i work there are very few female surgeons compared to female. The women couldn't do those hours with small children.

Can I ask how surgeons work? I watched the BBC documentary about St Mary's in Paddington. There was trauma surgery planned but the previous operation overran and the surgeon said they wouldn't let them start at 3pm.

Presumably emergency surgery happens 24 hours? And that's the bit that's hard to manage? Rather than the surgeon's elective list which I'm guessing is easier to work around? Or is it to do with the extra training needed to be a surgeon?

It's always interested me as 95% of surgeons do seem to be male.

@feb21,

It sounds like you do an interesting job with skill and integrity.

And I know many investment bankers who are like you.

However, this is anecdotal. The research demonstrates fairly unambiguously that large scale mergers are, on average, value destructive to investors.

This is why, among other reasons, I am trying to diversify my own investments as much as possible away from public equity markets. I far prefer to invest in small private equity.

Most, however, don’t have that choice. The fact that our capital markets generally work for high level employees (the ‘talent’-haha!) and bankers and lawyers is a real scandal.

It has turned property into the investment class of choice for the vast majority of the population, again not working favourably for society.

@feb21

M&A seeks to create efficiency savings and synergistic gains. Generally, these look far better on the Excel spreadsheet than they turn out in real life.

If I think about the acquisitions I advised on, some were more value-enhancing than others. But that's far more the fault of the company than the advisers. I'd say 95% of acquisitions were identified by the client (despite more acquisition search presentations than I care to admit to). Yes, we'd help them value the company, project manage the transaction and do the financial modelling (based on their numbers). But the post-integration piece is the clients' alone.

I can think of plenty of examples where we advised clients not to undertake corporate transactions. One company wanted to IPO and invited a number of investment banks to present to them on strategic options. We didn't believe they should and gave a very honest presentation. It went down like a lead balloon. They did float, but a decade later.

There were also more aborted than completed transactions. Our retainer was tiny in comparison to our final value fee. Several disposal processes were stopped when the client wasn't happy with the level of offers. We agreed. Yes, everyone wants their fees but having integrity and putting your client first is more important for your reputation long-term.

Good to get posts first hand on here from someone in sector

With all this it’s supply and demand and if people think it’s easy then why wouldn’t you just go for the money - if money was what you were after

This is why, among other reasons, I am trying to diversify my own investments as much as possible away from public equity markets. I far prefer to invest in small private equity.

I think that's a good approach. I've done the same. I previously worked with Gresham Private Equity so I invested in them a year or so ago. It's now winding up as Rockwood Realisation but I've been lucky and made a good profit. I don't like investing directly in companies, I'd far rather invest in funds or investment trusts.

My son is tempted by the rewards of investment banking but I'd prefer him to work in private equity over corporate finance. A number of my colleagues from audit and corporate finance went into PE. It's an interesting job as you sit on the board of portfolio companies so have somewhat of a say in their strategy.

[quote sst1234]@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.[/quote]
Well clearly the role of Apple CEO isn't oversubscribed based on the salary and bonuses, so why aren't more people choosing that?

Could it be because the number of posts in any given field isn't necessarily linked to how well that field pays?

@TheReluctantPhoenix

I will read the article but it’s important to mention that the money that goes in the pocket of the bank then funds private equity which is actually a very important financial sector for the economy and social progress in general!

@TheKeatingFive

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

Well the poster I responded to seems to think we can do without banks, so no, 'we' don't.

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

Well you know what they say, the worst economic system, apart from all the others. I don't see anyone offering to do without the tax I raises for the treasury however.

Apart from all the others that we've tried so far. Too many people thinking that capitalism in it's current form is as good as it's going to get, so no point trying to change it - at this point it's almost dogma.

You may think we should all be grateful you're paying lots of taxes, but split a £500,000 (for example) salary 5 ways instead and the tax is still just about the same, split it 10 ways and OK it's a bit less and we don't get the corrosive affect that blatant unfairness brings to a society that you're seeing in this thread (plus who says you wouldn't re-jig the tax system, both personal and corporate, to balance it anyway).

The sooner people realise that what we live under is a combination of a Corporatocracy, Bankocracy, Kleptocracy and Oligarchy the better.

The only meaningless sham of "democratic" process we have in this country is getting to vote for which self enriching puppet of the banks, the corps and the establishment we want to have telling us what to do from the Houses of Parliament.

@feb21

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.

The whole issue stems from the ‘zero sum’ mentality! Implying that if bankers got less bonuses then everyone else would be better off. But it’s not true. The number of bankers is so small, even if 90% of their bonuses were taxed it’d be a drop in the ocean (plus nobody would want to do their jobs!)

If they didn’t get huge bonuses in the first place they wouldn’t pay taxes and that money wouldn’t go in.

Too many people thinking that capitalism in it's current form is as good as it's going to get, so no point trying to change it - at this point it's almost dogma.

We'll lead the way for change then. What would you like to see? Get people on board. Campaign for it.

You may think we should all be grateful you're paying lots of taxes, but split a £500,000 (for example) salary 5 ways instead and the tax is still just about the same, split it 10 ways and OK it's a bit less and we don't get the corrosive affect that blatant unfairness brings to a society

Firstly, I'm not a banker, secondly that's not how the industry works, it's not a model that clients buy into (see upthread for this discussion).

Campaign for tax reform by all means, campaign for new ways of organising society, but general kvetching about an industry people don't really understand isn't likely to get anyone anywhere.

@MongoOnlyPawnInGameOfLife
But salary isn’t the problem, is it?
It’s exploding housing costs!
Food and consumer goods are cheaper than they were 20 years ago. When meat was a treat, very few could afford. Now even thé not so well off (albeit in processed food perhaps).

Increasing salary by astronomical amounts isn’t going to help as it do sh give anybody more spending power. It goes straight into the pockets of LL’s.
I think housing should be socialised

Campaign for tax reform by all means, campaign for new ways of organising society, but general kvetching about an industry people don't really understand isn't likely to get anyone anywhere

I think it may be you who doesn't know "how things work"

We elect governments (of any persuasion) to ensure a decent and fair society, its their job to ensure fairness in the tax (and banking systems) not for a few random's on MN to campaign for change.

You may as well have said back in March 20, "Go campaign for govt/pharma to invent a CV vaccine, if you don't like lockdowns"

I used to work for Lloyds (left a long time ago) and the bonus/payrise system was so unfair.
Us "plebs" didn't actually get very much and it still didn't take our salary to that of staff in other banks. If you received a less than met expectations on your end of year review, you wouldn't get a pay rise or bonus. The system for appraisals was wrong as a certain percentage of people in a larger team had to fit in each achievement category so the system was punishing them and the fact several were constantly let down by people not helping them improve.
As for those more senior, they still were rewarded through pay increases or pension schemes even if they didn't get a bonus. The system is so wrong and as usual, it's always the lower paid who suffer first.

[quote sanbeiji]@MongoOnlyPawnInGameOfLife
But salary isn’t the problem, is it?
It’s exploding housing costs!
Food and consumer goods are cheaper than they were 20 years ago. When meat was a treat, very few could afford. Now even thé not so well off (albeit in processed food perhaps).

Increasing salary by astronomical amounts isn’t going to help as it do sh give anybody more spending power. It goes straight into the pockets of LL’s.
I think housing should be socialised[/quote]
They're both problems but in different ways.

Food and consumer goods are cheaper than they were, but they are about to go up again in price and it won't be a short term thing unfortunately.

I do agree that a lot more housing should be provided by the public sector - selling off council housing and not replacing it has been a big contributor to the current housing crisis.

@Vinorosso74

I used to work for Lloyds (left a long time ago) and the bonus/payrise system was so unfair. Us "plebs" didn't actually get very much and it still didn't take our salary to that of staff in other banks. If you received a less than met expectations on your end of year review, you wouldn't get a pay rise or bonus. The system for appraisals was wrong as a certain percentage of people in a larger team had to fit in each achievement category so the system was punishing them and the fact several were constantly let down by people not helping them improve. As for those more senior, they still were rewarded through pay increases or pension schemes even if they didn't get a bonus. The system is so wrong and as usual, it's always the lower paid who suffer first.

Ah, the joys of the bell curve. I used to work for a bank and it was so stupid. Although mine was unionised so the lower paid workers always got a small increase every year.. senior management were the first to be let go or demoted, even if they made roles redundant lower paid were usually redeployed. Fire the most expensive first they say…

Also what people mean by ‘bankers’ … clearly only 2-3 roles in banks!
Other roles are well paid but they’re not really billy big bonus.

We elect governments (of any persuasion) to ensure a decent and fair society, its their job to ensure fairness in the tax (and banking systems) not for a few random's on MN to campaign for change.

All societal reform starts with the people, evidenced by all of those who campaigned for what they believe in and brought about change. If you don't want to do that, you just want to moan, fine, but don't expect the rest of us to take it seriously.

Campaign for the parties you want to see in power, campaign for electoral change (it's sorely needed) but there really isn't any point in sitting back and expecting the Tories to make the world a better place for you. It's not in their interests and they never pretended it was

OP - would it help to rethink the bigger bonuses as not really a bonus, but commission?

The bankers make the bank huge amounts of money, who should get that money? Should it all go to shareholders who have done nothing to earn it other than been lucky enough to have the spare money to buy a share, or should a large chunk go to the people who's efforts and skill have made the made the large profits?

@TheKeatingFive

Too many people thinking that capitalism in it's current form is as good as it's going to get, so no point trying to change it - at this point it's almost dogma.

We'll lead the way for change then. What would you like to see? Get people on board. Campaign for it.

You may think we should all be grateful you're paying lots of taxes, but split a £500,000 (for example) salary 5 ways instead and the tax is still just about the same, split it 10 ways and OK it's a bit less and we don't get the corrosive affect that blatant unfairness brings to a society

Firstly, I'm not a banker, secondly that's not how the industry works, it's not a model that clients buy into (see upthread for this discussion).

Campaign for tax reform by all means, campaign for new ways of organising society, but general kvetching about an industry people don't really understand isn't likely to get anyone anywhere.

I never said you were a banker (though that was certainly the implication most people would take when you said no-one was offering to do without the taxes you raised for the treasury, in a discussion about bankers salaries).

So we shouldn't try and change anything because the 'clients' can't handle it and keeping them happy is more important than trying to create a fairer society (or at least try and stop it falling apart even more quickly than it currently is)?

Posting on Mumsnet full stop is not getting anyone anywhere particularly. I'm not sure that moaning about someone moaning is likely to achieve anything for you either. There wouldn't be many posts to read if every one had to be capable of achieving something tangible.

So we shouldn't try and change anything because the 'clients' can't handle it and keeping them happy is more important than trying to create a fairer society

Well it's more important to the investment banking firms, yes. It's not their job to create a fairer society.

That's governments job. So back to everything I said about lobbying for electoral reform, taxation reform, etc etc.

@TheKeatingFive

We elect governments (of any persuasion) to ensure a decent and fair society, its their job to ensure fairness in the tax (and banking systems) not for a few random's on MN to campaign for change.

All societal reform starts with the people, evidenced by all of those who campaigned for what they believe in and brought about change. If you don't want to do that, you just want to moan, fine, but don't expect the rest of us to take it seriously.

Campaign for the parties you want to see in power, campaign for electoral change (it's sorely needed) but there really isn't any point in sitting back and expecting the Tories to make the world a better place for you. It's not in their interests and they never pretended it was

Serious question - do you honestly believe that, in our system which, though clearly better than some, is seriously rigged in terms of preserving the status quo for the wealthiest in our society (and if anything is increasting the gap between rich and poor at an ever increasing rate) it is possible for anyone to affect meaningful change that will seriously negatively impact the existing ruling class? Especially given the increasing globalisation that makes it much harder for individual countries to take their own path even if they could somehow force change internally.

Because all evidence from the last 30 years points to the contrary as far as I can tell.

Moaning on forums is about as effective as it gets sadly.

So hands up who wants to go into work today and have to find somewhere to invest tens of billions of pounds of the populations pension pot?? No stress? No responsibility? No fall out if your investment strategy fails and you lose those billions, billions that people have been putting away for their whole careers? Anyone? The fall out actually won't just be felt by you, losing your job or bonus if things go wrong but all your colleagues, the people who lose their pensions, the man in the street as pensions are underwritten by the government, it's not fucking about in front of screens just moving money about.

As for it not producing anything, a lot of those bankers pay more in tax on their bonuses than the man on the street earns. That tax that goes into the government coffers to pay for healthcare, education and everything you rely on that is provided by the government.

do you honestly believe that, in our system which, though clearly better than some, is seriously rigged in terms of preserving the status quo for the wealthiest in our society (and if anything is increasting the gap between rich and poor at an ever increasing rate) it is possible for anyone to affect meaningful change that will seriously negatively impact the existing ruling class?

I think more meaningful change than you are talking about here has been occasioned at various points during history. I'm not saying that's been easy, but it has happened.

One of the biggest issues for the U.K. is the lack of any effective or credible opposition to the tories. Labour have alienated the very people they're supposed to represent and have wasted their time on pointless trivialities. Uniting those who have been disadvantaged by the system would be the most effective first step in changing it.