in feeling that the bankers are REALLY taking the piss?

[glasjam]

It's almost as if we aren't expected to notice OR that we notice but that's it's so outrageous we can't really process it but - listen here, I just watched the guy from RBS on the news look very humble and self-satisfied because he has refused to take his 1.6 million ANNUAL bonus this year............for the sake of the economy, business etc....

Sorry for all the ellipses BUT really - are we to be grateful for that?? I think we all have to have a huge big economics lesson to have half a chance of understanding WHY it is a BAD thing that bankers do not get their ridiculous bonuses. And PURLEASE they are not the kind of bonuses that bring a basic wage up to something more liveable on - these bonuses ARE the wage if they would care to admit it.

Do we really have to support the million pound incomes of bankers in order to keep a roof over our heads? I loved the way Norman Lamont spoke of the Treasury as a fantastic Oxbridge club. He's right - but then why are we all holding the buckets under their leaks??

Here here dawntigga. It's just lazy saying 'bankers'.

when a company goes bust, all of its employees lose their job, there's no more bonuses for them. The clowns running these banks bankrupted them. The whole nation struggling to make ends meet bailed these incompetents out, they are lucky they still have a job. They have got a cheek to award themselves bonuses while the rest of the country struggles, most of them getting no bonuses at all, many getting laid off and many getting pay cuts.

I'm with dawntigga and skinsl on this. I don't work for a bank but most people who work for these banks are not reaping huge bonuses. Most of them are either getting nothing or paying tax on a bonus they won't get for three years if they stay with the company.

The banks, also, are made up of many different companies - the majority of which were profitable.

claig I can see where you're coming from. I think, perhaps unfairly, that the banks have been loaned money because there is a good likelihood it will be repaid. I'm not sure the same is true of Corus. Also, if the banks had been allowed to fail there would have been a great deal more unemployment and hardship. I know it's not fair if it's your family or your area that's affected.

I live in West Yorkshire and I know there is still huge concern that large numbers of HBOS employees will become unemployed. Those people will not be the executives that allowed poor investment decisions to ruin their bank.

Also, and this never seems to be mentioned much, what about all those companies who defaulted on their payments and have caused teh write-off situations? Why are they never pilloried for contributing to this mess?

Oh, what a surprise, another banker bashing thread. And what - again some of the people on the thread don't actually have a freaking clue what goes on in an investment.

Sorry if I sound bitter, but work in an investment bank (not a banker either) and have had two arsing years of my industry being slated repeatedly because of the actions of a few. Yes, there are arrogant, reckless, stupid twunts working in investment banks (trust me I know. I deal with them on a daily basis), but they are definitely in the minority. And there are many reasons why the world's economy went tits up - over-valuation of assets (particularly realty), governments (particularly the UK and US) pushing to have cheap credit and everyone owning their own home, massive property bubbles (UK, US, Dubai), the credit rating agencies giving fantastical ratings to essentially junk assets, natural economic cycles (bust follows boom, it is the way - what goes up must come down) ... and yet all the blame (in the UK at least), has fallen on the shoulders of the banking industry, some of which played a part, but by no freaking stretch of the imagination is solely responsible.

And yes, I got a bonus. Not millions (ha! I wish) but it was a few thousands, and I worked hard for it. Wages in banking have been frozen for at least two years, and some banks continue to freeze wages (DP's pay has actually gone down in the course of three years, despite being promoted).

in an investment bank that was meant to read.

they are lying to us, it's got nothing to do with Joe Soap and his mortgage or companies defaulting. Those at the top know very well what is was really all about. The risks that they took with derivatives gambling placed the whole system in peril. When counterparties asked for their money, a black hole, which they all knew existed, was exposed. The whole house of cards then collapsed on itself. They then told us that we were to blame, we should never have borrowed for that extra holiday.

It wouldn't surprise me if the money is never repaid. It's more likely they'll have another crisis and ask us to fork out even more.

I know that most of the employees in the banks work hard and didn't have a clue about what was really going on. But this is the same for all the hard working employees at Corus. Through no fault of their own the employees in the banks ended up in bankrupt companies. They are lucky to still be in employment. They should be grateful that they still have a job, they should count themselves lucky that they still draw a wage, they should be humble and not take bonuses on top.

BDSM/dawntigga/Serenity - absolutley no one is blaming or castigating lower paid back office staff in investment banks or the people who work in the high street branches of retail street banks doing basic retail bank business or lending to small busnesses. We need more of those type of people to be paid a proper wage.

The 'bankers' that I and others are talking about are the most senior managers who and utterly disasterous decisions involving literally billions of pounds who continue to walk of with massive bonuses while more junior staff take paycuts or lose their jobs.

I used to work with a firm that was not a bank but a commodity trader. Every day we all came to work we knew that if we lost money that was it - game over. No one would bail us out. We therefore ONLY took sensible risks.

Really, and what do you base this on claig? I have seen some of these applications for sub-prime mortgages (for a lot of these mortgages, they were set up by a company that is based in the midlands, not investment banks). They are self-certified, so you can pretty much say what you want. Normally, people would check, but the company that was reviewing these applications did shag all. There was one where they had merrily handed out a £150k mortgage to an unemployed 18 year old, another were they hadn't bothered to check an application where the individual said they managed a hotel, was paid £100k per year, but in weekly installments (they were actually the cleaner, and not paid anywhere near £100k). The underlying assumption on all of these things (and on property shows like location location), was that property prices in the UK were going to continue to rise (despite this being economically impossible), so even if people did default, the property could be sold on and the initial investment + the increased value in the property could be recouped. But then people started defaulting (because they couldn't afford a mortgage to begin with) and house prices started falling.

Personal debt in the UK, in about 2007 reached (if memory serves) about 3 times GDP. It was the highest in Europe - and are you honestly saying that so many people spending beyond their means and getting into masses of debt is a good thing? What about personal responsibility? If you can't afford to go on holiday, save up, wait and then go, rather than getting further into debt to do so. Once again, I will also drag out the point that the City, for Corporation Tax alone contributed 25% of tax revenue. This is not including all the money raised from income tax, NI, CGT and so on. I was laughing and somewhat shocked when Alistair Darling complained last year about Goldman's allocation of funds for bonuses, saying that they'd taken government money:

• All US banks had to take money from TARP, as the US was trying to avoid stigma being attached to institutions that did take money
• Goldman repaid all of the money it had borrowed, pretty swiftly
• If Goldman didn't pay out bonuses, and retained that money as profits, it would be paying c. 25% tax. However, when it is paid to employees as bonuses, the rate of tax is generally around 40%, plus NI on top.

I am now going to hide this thread, because I don't like arguing with idiots. They bring you down to their level.

With all due respect ABetaDad, I worked as a FE lecturer and we got the first wave of redundant bankers who thought they'd downsize and become teachers. Without exception they came in boasting about how they were used to the long hours. Teaching can easily fill up 90 hours a week if you let it. The long hours culture is not restricted to banking only.

What used to amuse us, the hardened teaching hacks, was the point at which they realised that they would actually have to work for all of those hours. Lunch breaks? pah! for wimps. The moment when they realised just how hard we worked for the miniscule fraction of the wages they had been previously paid was usually the point at which they took off to do something else less taxing with the sound of our laughter ringing in their ears. Not one of the exbankers we mentored made the grade.

Serenity, this is the smoke and mirrors that they are fooling us with, making us look in the wrong direction, while the elephant is staring us in the face in the opposite corner.

The real estate loans and the borrowing is peanuts to the trillions of derivative exposure. It all started back with the LTCM collapse years ago. They knew all along that the system was broke. Bubbles like the internet boom were created to stave off disaster. It was already written in the cards what would happen, it wasn't a matter of if but a matter of when. Eventually time was called and they decided to pull the plug, because counterparties could no longer hide their real positions, the debts were now to enormous to off-set.

well said slug. They have the cheek to lecture us about how hard they work, how clever they are, how much we need them, and how the country would collapse if they took their services abroad and we stopped licking their boots.

Serenity - I agree totally with what you say on personal debt. However, I still think many more senior investment bankers should have lost their jobs/bonuses for pursuing reckles risky securitisation and trading of those subprime self-cert loans you are speaking of.

Slug - yes there are other people who work very hard. I went from working in the City to being a University lecturer myself. As I said - not denegrating others who work hard and I certainly DO NOT think the hard work of City bankers is a justification for the bonuses we are now seeing being paid out for those at the top.

While it is pretty clear that the relationship between remuneration and risk in the banking industry needs to be addressed, IMHO there isn't anything inherently wrong with RBS paying reasonable bonuses to its investment bankers. The IB elemenet of RBS made several billion on profit this year, and the bank has operating profits. Its losses came from impairments on supposedly safer loans to businesses and property owners (ie mortgages). Without the IBs the losses would have been much, much worse.

A lot of people have been suggesting that bonuses should be paid in stock and partly deferred, but this does not work. Everyone at Lehman took a big chunk of their bonuses in stock, and as things were going wrong Dick Fuld made it clear that anyone caught selling would be out - and the employees lost a lot of cash. The same applies in the UK - Andy Hornby of HBOS lost about £8 million or 80% of his net worth when it crashed.

The best idea I've heard (and it makes sense to me) in terms of managing trading risk is that bonuses should be paid in cash, but across three years, and that the retained cash is used as a first loss buffer on traders personal books - they make a loss accross a year and they make the clients good from the retained bonus. Obviously if someone has a stand out year this is likely to mean that they are very conservative in the next couple of years (to minimise their risk of losing deferred cash) which is likely to impact on performance for clients/the bank but thems the breaks if you want people to focus more closely on downside risk.

The bonuses being paid out in the City have always been big - it's just now that people seem to be getting so narked at the size of them. And as people have pointed out, it's only the really top people that get the mega-amounts that are bandied around in the press.

The other thing is that not all banks took money from the Government or needed to. And not all banks took ridiculous risks or exposed themselves to so much risk that they were in danger of going under. But they've all been hit by the 'bonus tax' because it's a populist move in an election year.

I'm not saying that some banks and some bankers weren't irresponsible, but I hate the way that everyone who works for them being tarred with the same 'hanging's too good for them' attitude.

I don't work in banking by the way, just know quite a few people who do.

The bit i love is the way someone in the city says in an interview "we need to pay bonuses to keep the best brains"

TO KEEP THE BRAINS THAT HAVE GOT US INTO THIS MESS!!!!!!!

NO NO NO No

ABetaDad - 'fraid I also have to disagree with your characterisation of trading as being akin to gambling in a casino whereas "traditional banking" is safe as houses (irony intended).

Actually it?s the ?core? business of taking deposits (repayable on demand) while lending (for up to 30 years for domestic mortgages) that is inherently the most risky banking activity ? as Northern Rock discovered, as RBS proved with it's past two years of results, and as demonstrated by James Stewart in ?It?s a wonderful life?.

By contrast a well run casino is quite a safe business for those who own and run it - if you keep a balanced book then over time the house always wins. The customers of a casino are on a hiding to nothing, of course ? but there the analogy breaks down. While all the casino?s customers are gambling, many banks? customers really want foreign currency, or hedging etc. If you are going skiing you need dollars or euros or whatever. If a company borrows floating rate to invest in something with a non-floating return (pub rentals perhaps) you really need an interest rate swap. And the bank punters are willing to pay the fees to access derivatives as a form of insurance.

I think the point is that the RBS performance has been better than expected. So the bonuses are rewarding staff for a job well done. Bonus packages are part of the incentives that make these people motivated to perform well, so thinking about it I don't object to them, as long as the bank is doing well. And RBS is doing well, even though it's hard for us to get our heads round.

When are they going to pay us back?
That's what pisses people off about the big bonuses that are being paid out- it's our money they are using!
Lots of people work hard all their lives for a tiny percentage of what these jokers will earn in a year

Really? How much of their debt have they paid off then?

But the odd thing is this whole bonus culture - once upon a time in the not so distant past you got paid for doing a good job. Now you need to be incentivised, you are not expected to be loyal to your employer, because everyone else is doing it you are expect the same thing.

And an awful lot of their business has no social value at all or at times is just immoral ie: Goldman Sachs lie/ massage the fact about their debts to get into the euro zone.

Doing deals just so they get a big pay off ie: going public so that the directors, bankers, lawyers etc.. take their cut look at Kraft / Cadbury - more people will lose their jobs but some people will get even richer....

And yes you do long hours, but as you are only productive for about 8/9 hours a day actually it is worrying that people do 20 hour days - thats where mistakes are made.

So the whole big stinking shit hole needs pulling down - anarchist moment.

Thats Greece getting into the eurozone not Goldman Sachs

CinnabarRed, but who is the house in this casino? It seems to me that the banks and hedge funds are players at the table. They are gamblers striking up over the counter bets with other players. They earn a fee for writing the insurance, but when something goes wrong, like the Asian financial crisis of 1997 or the Ruble crisis of 1998 the big gamblers get their fingers burnt. When customers start claiming on their insurance, the big players find there is nothing in the pot, due to their gambling losses. That's when a credit squeeze begins as banks no longer trust each other to be able to pay up. That is why Northern Rock couldn't access the liquidity to carry on its business because no one was prepared to lend them any money for fear of it not being paid back. The loss of faith in the entire system was caused by the gamblers running up huge losses.

I used to work for Rbs. Just a humble cashier. I paid into sharesaves and invested my profit sharing in shares. I had about £15,000 pounds worth of shares. They are now worth about £1,000.

I must admit I did not really listen to the news last night and I haven't read the whole thread but no I do not think these people should receive bonuses.

To be fair, I have 2 friends who earn stupid money as bankers and they are both people who have been saying for years and years, 'This gambling is terrible, it's got to stop.'