Bankers going to get their bonuses anyway

[jujumaman]

here

I don't know what to think about this.

We have a friend who works at another bank that has been bailed out by a foreign govt. He was telling us this weekend that he's planning to sue because he may not get his promised bonus of £2m or so, and will "only" end up with his salary which is prob around 250k

I know bonuses are intrinsic to banks' cultures but how - in these god awful times - can £2m bonuses be justified. My friend says his was the only division of his bank which made money last year, so why should he be penalised for others' faults? My feeling is every taxpayer is being penalised for others' faults and someone who is still earning an excellent salary should graciously accept it and be grateful he still has a well-paid job. But my dh tells me I'm being naive and that bankers will carry on getting these vast bonuses just as before. Not convinced by arguments in article I've linked to. Anyone with more knowledge of the city than me like to defend my friend's position (I v much like him personally.

If none of the banks with state backing pay bonuses, it doesn't take a genius to work out that there will be less jobs with big bonuses (or salaries - it's immaterial) to go round. And so some bankers leave the country. There are so many that don't pay anywhere near what they should be paying in tax anyway I don't imagine it'll make a whole heap of difference.

I'm not angry with you but furious with RBS - I'm working with two companies at the moment who have loans with RBS, not massive ones but RBS have decided they want the money back now. So the companies are having to lay off hundreds of workers in one case and go into administration in the other. The banks are still continuing to act like they're privately owned companies and it's absolutely appalling.

Anyone who works for one of the banks that has swallowed billions of pounds of public money is welcome to jump ship if they can get a better job elsewhere. Whining and demanding bonuses from the taxpayer is very poor form - other people in companies that have gone bust have lost their jobs with no pay-offs.

All this guff about top bankers going overseas - frankly we'd be better off without the lot of them. They've screwed every man Jack of us, they are welcome to fuck off and screw someone else for a change.

(top bankers i.e. head honchos/investment bankers, not counter staff.)

I can't understand the argument that the bonuses have to be paid to retain staff. At the moment so many people are losing their jobs that the staff are unlikely to leave unless they are made redundant due to the lack of new jobs to go to, and if any do leave there will be 50 or so people (probably well qualified) applying for their jobs.

I think the government are completely spineless to have bailed out the banks without putting a clause in regarding bonuses (ie. that no bonus should be paid to staff of bailed out banks until the taxpayer is paid back).

If the government had not bailed out these banks presumably the banks would have gone bust so the bonuses wouldn't have been paid anyway.

happywomble - and the government were even more useless in not making sure the banks didn't continue to back small businesses. The ones I was talking about in my earlier thread owe less than some of these banker's bonuses and yet their credit is being pulled and hundreds of people are going to lose their jobs. Where's the logic and justice in that?

Yes - I feel really sorry for the small businesses ....the government seem to be handling the situation with the banks very badly.

I don't have confidence in their handling of interest rates either. And as for the VAT thing....grr

I think I could do as well with my rusty A level economics!

Newsnight, anyone? Greedy Bankers on trial...
Watch the Paxman at work

disincentivise - what a word.
Perhaps people in the banking trade should re-think their values a tad and consider that keeping their job and their bastard company afloat so that their job becomes more secure sufficient incentive, rather than thinking "oh sod you, if you aren't going to use some of that taxpayers' money to give me my bonus, I'm not going to do any work to get you out of the hole you got yourself into"

disincentivise my arse - get some morals.

thumbwitch yes iam watching Prescott was a STAR
I was cringing for the others

What would disincentivise your arse, Thumb? Piles?

funny how they came out with the same arguments as on this thread - perhaps they had read it?

No, I know they are standard arguments on both sides but it did make me smile that some of the phrases were almost word for word what has been said here.

They had the top man of Barclays on BBC news. He came across as a decent down to earth chap..I was pleasantly surprised.

He appeared to be saying that those at the top of Barclays would not be receiving a bonus and Barclays has managed to survive so far without being bailed out. If Barclays isn't giving bonuses than the bailed out banks certainly shouldn't be.

Maybe we should all threaten to move our accounts away from the bailed out banks if any of them dare to give out bonuses using taxpayers money.

Incentives without an association with risk, how utterly pointless for the tax payer. If your company fails, why should you still be propped up simply because you work for a bank? This principle doesn't apply anywhere else in industry or commerce.

Of course the top people (i.e. the decision makers) aren't getting bonuses at Barclays, nor are they at RBS or almost any other bank. It's the junior staff that this question relats to.

Essentially I think the problem here relates to a misunderstanding of the word "bonus". Base salaries for many sales people and others are low, so low that if you have a family in London, you can't live on it. The "Bonus" reflects the commission on sales you make rather than something extra you just get given at the end of the year on a whim.

Agree totally on the problems with small businesses, they're the real victims.

Now let's see what they have got to say for themselves.

This page is better.

Bit of a show trial but good stuff so far.

chocolatedot - what do you consider as "low salaries"?

Some banker was complaining they only earnt £90,000 basic salary yesterday..I wouldn't call that low. Anyone earning 90k should be able to exist without a bonus.

I would consider a low London salary as under 20k and many people in publishing and other industries have to survive on that. If Barclays want to give the lower ranks bonuses that is fine as they haven't yet taken taxpayers money. The bailed out banks should literally not pay a bonus to anyone.

People should budget according to their normal salaries when working out what mortgage they can afford. The bonus should be for luxuries like holidays or new cars that people can manage without when times are tough and the bonus isn't paid.

The national average wage is in the region of £25,000.

If you are earning four times that I fail to see how you can plead poverty, even in London.

I think one has to be very careful with what they are describing as 'failure' in this context.

Barclays published the highlights from their annual accounts for 2008 yesterday with PROFITS of £6 Billion (yes Billion) pounds. The tax provided for was almost £1Billion pounds.

Is that failure?

The banks have to meet what are called 'capital adequacy tests' so that there is less chance of their failing. Because they have taken write downs on their so called 'toxic assets' some of them are struggling with capital adequacy. That does not mean they are insolvent or have 'failed' it means that they need new capital in order to meet their capital adequacy tests.

In normal times this would have come from the capital markets, but when the capital markets tightened up, they could not obtain this from the market and so in some instances the bank decided to support them, until such time as they could raise this capital on the markets again (or it was repaid).

I don't think that anyone is yet suggesting that the government will not have all of their investments returned to them. As far as I am aware, the investments are not impaired and they are expecting all monies to be repaid and indeed have a fixed timetable of when that will happen by.

Who's pleading poverty? If you're a 45 year old Cambridge educated man with a PHD from Imperial and 20 years work experience, I don't think it's unreasonable to expect to earn more than £35k a year in central London. I'm afraid it's naive to think anyone is going to do a job whereby they routinely generate 10 - 20 times their salary for their employer in return for a salary akin to that of a teacher.

From a personal perspective, I don't really care what they do at RBS. As a taxpayer, it's a different story.

No doubt no-one will be watching Fred the Shred's appearance today with more anger than the abnk's staff.

soapbox - Barclays hasn't yet failed. It is the other banks who have failed if they have had to take bailouts from the government.

Obviously the bailed out banks will be able to pay the tax payer back sooner if they put bonuses on hold for a while. In the case of Northern Rock they could also pay the shareholders back before handing out bonuses to the staff.

Those working at bailed out banks are now civil servants so they should not be entitled to bonuses..I don't think other civil servants get bonuses do they?

No but civil servants pay packets are structured differently. i.e many senior civil servants get far bigger base salaries than bankers.

Some of the questioning is getting a bit childish.
Even I am starting to warm to these tough Scottish chaps.

Taken from a Times article in 2004. It is my understanding that £200k salaries are not uncommon for sernior civil servants.
"These payments potentially could give permanent secretaries, now on a band from £121,000 to £256,550, increases of up to £50,000 next year. Other senior civil servants will see their pay bands rise by 2 per cent, ranging from £50,000 to more than £190,000 depending on rank and performance"

chocolatedot - I expect those who are 45 with cambridge degrees are earning more than £35k as their basic salary.

I think it would be normal for bonuses to be paid if an individual has achieved their targets and the company is doing well. Obviously the banks aren't doing well so the bankers should just be glad to still be in a job, knuckle down and act more responsibly by loaning money to people who will be able to pay the loans back.