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.

They have not decided on bonuses just yet at RBS.
Have a chuckle and let's see what happens.

The way some people talk about bankers/fund managers you would think they're alchemists. Live by the market, die by the market.

DH's company did very well until the last quarter of 2008, they are still talking about not giving them the bonus that they deserve for the work they did.

They are not getting their bonus because the company expects 2009 to be a very bad year in comparison to the last 10 years.

Lots of people deserve their bonuses, but are not getting them.

Companies who have been bailed out should not give a penny in bonuses and the top management should be removed.

Northern Rock staff have received bonuses yet the government is not giving the share holders anything for their shares...hmmm not very fair is it.

MadameCastoafiore
"My husband has done nothing but work very hard and make lots of money to ensure people are paid decent pensions."

A lot of people have worked hard too and have either lost their jobs, taken pay cuts or have been refused their bonus.

In a financially challenging time, the expectation that many in the banking industry have that they deserve and should receive their bonus is quite frankly ludicrous. Banks are being bailed out by the tax payer. Bonuses are paid to reward outstanding performance (unless you work for a bank where it is paid regardless of performance). Therefore, banks should not be paying bonuses courtesy of the taxpayer.

Bonuses are usually performance-based and are in employees' contracts.

So, as long as the employee performs at or above target, he will get his bonus which is calculated with respect to his outperformance.

They actually made a profit over the whole year, Dittany.

And it was bad investments made by the company that resulted in a loss in the 4th quarter, not the staff in the day-to-day business.

I am not saying that he should get the bonus but it is a big part of our budget (pays for holidays etc) so will be missed. If it means that the company gets over the bad economic situation and comes out stronger then fine. (Not that they will ever reinstitute the bonuses, but what the hell, as long as he has a job, we are going to be happy.)

My problem is that

• his company has not asked for or been given any government assistance so can pretty much decide themselves where they want to spend or save money.

• the banks have been given assistance and a LOT of people have lost their jobs/houses/savings as a direct result of mismanagment by the banks.

That article says Northern Rock employees got GBP 2000 per person. As a year's bonus, that is a token gesture.

The Northern rock employees shouldn't have a bonus at all because it is effectively being given by the tax payer. The priority should be to pay back the tax payer then the shareholders. Maybe then they can start giving out bonuses again.

Many companies who haven't been bailed out are not giving bonuses or pay rises to their workers, and many people are being made redundant. The only companies giving out bonuses should be those who have made a profit and who have not been bailed out.

MadameCatafiore, almost none of the hundreds of thousands of people who are losing their jobs entirely because of the economic situation made any decisions that created it. Almost none of them deserve to be punished. The vast majority of them have done nothing but work very hard. Yet, somehow, they wind up suffering anyway (and millions more will be financially hit even if they don't lose their jobs). It seems to be only in the financial sector that people think that their own virtue and hard work should bring them a free pass through the tough times that are hitting all the other virtuous hardworking people.

MadameCastafiore, I am sure your husband is one of the good guys but honestly I wish people would wake up to what an utter con pensions and investment funds are, manage your own investments people, it's been proven on many an occasion that the average man in the street can perform as well as the fund managers with some research and save yourself the fees, why pay these people when they are loosing your money ???

At the risk of putting my neck on the chopping block, what did we expect?? Bankers live in a different world to us proles and the only way I would have approved any kind of bailout for a financial institution is when I saw the top bods of said financial institutions buying value baked beans and browsing the rails of the local charity shops for their clobber. As it is, the rich just get richer on the backs of the poor. Robin Hood all over again, only this time instead of burning our houses to the ground when we can't pay up our debts they just repossess them instead.

Publically funded bailouts have done bugger all for the economy. The only thing they have done is enable the boys and girls in their Saville Row suits to play Monopoly again. And who's to stop them when they can just keep coming back to the banker in charge of the public purse when the money runs out?

What is the big point that I'm missing here??

Oh I have worked with some financiers who were brilliant and great thinkers - great guys and girls who worked hard and really cared about their work and clients.

Others, it has to be said, we used to wonder how they found their way to work in the mornings by themselves but did go to the 'right' school or used to be in the 'right' regiment. I once had a row with one about some % figures he gave that added up to over 100%. He just didn't understand why this was a problem when it was info for clients.

I haven't worked anywhere that has been bailed out though, so they must be doing something right.

Fucking disgraceful.

In terms of the 'stress' from managing billions of money, a hedge fund manager acquaintance of mine summed up the city attitude perfectly - "Stressful why? - its not my money'. Part of the reason pensions are down so much is that the City has taken too big a cut - our pensions are lower due to these City bonuses. They take a management fee year-in-year out regardless of whether the market has gone up or down. Despite the fact that they've managed to lose me 20% of more of my pension they still expect a 'performance-related bonus' as they did less badly than someone else. Clearly a lot of people in the City have still not woken up to the fact that the world has changed forever.

"World has changed forever" - How?

Performance related is a big misnomer in the city. Regardless of their performance, these hacks still cream off extortionate management fees and also expect to receive bonuses on top of that.

There was an idiot hedgefund manager with a bloated head and ego on Newsnight last night attempting to justify why these charlatans deserved their bonues. He kept saying that if they are not paid their bonuses, then they will leave and we need to keep our brightest and best. Vince Cable rightly challenged him and said where are they going to go considering that the world is in financial meltdown and many of them are losing their jobs anyway.

However, just to demonstrate how out of touch this numbskull was, he said that the Madoff crises happened because those who could have spotted what he was doing were not paid enough and therefore were not incentivised to work as hard as they could have done.

Can you believe that? My DM worked as a nurse for 30 years and she was dedicated. She did not need an obscene salary or bonus to do her job. That attitude sums up what is wrong with the City. It is full of selfish, self-serving, narcisstic egomanics who think "I" rather than "we" and participate in an industry which is nothing more than a zero sum game.

Personally, I think the govt should have let Northern Rock go to the wall just in the same way as Lehmann Brothers and this would have sent out a clear signal to rest of them that the gravy train is over. After all, isn't that what these staunch capitalist believe in?

Totally agree with Sorrento - don't pay a fund manager, do your own investments or get a tracker fund. In the long term, they almost always outperform managed funds and for a tiny percentage of the fees.

Capitalism will never fail because Socialism will always save it apparently god they wind me up and having sat and listened to "them" talk about their customers like they are something they trod in, I'd burn the bankers at the bloody stake.
I did learn a few things though, one being there are those who understand compounded interest and those who pay it, we really really need a revolution.

I agree its just wrong. My bonus is based on the Company meeting its financial targets as well as my personal performance before I'm even eligable for anything. There is something very wrong with the bonus system in banks. I will get little or no bonus this year just because of the state of the economy. I imagine many people are in this position but I'm grateful to have a job.

I think that the people who work for banks on tiny wages (branches etc) should get their bonuses - that extra £500 really counts when you're on that kind of money.

Anyone earning over say £20/25K (full time) should not get a bonus.

I think huge bonuses are obscene anyway, in the best of times. There is no way that anyone should get them in the present economic climate.

OK, this is how it works, really, really, really:-

In the Investment Banks you have three types of people earning reasonable bonuses.
(1) You have the professional lawyers and accountants who are not part of the decision-making process anywhere, but are the people who keep the motor running. Even at the senior levels they work for a 'basic' salary of about a third of what they would earn in industry and less than a 5th of what they could command in professional firms. The difference is made up in 'bonus'. Do you give them nothing and lose them all? They typically are amongst the best in their field - in the good days the banks only ever picked off the very best (or the very hardest-working and longest-hour mugs), so yes, they will walk into other jobs, thus putting job pressure on their equivalents in Industry and the professions.
(2) You have the guys who are still 'rainmakers' - mostly in the equity and commodities and client relationships fields. These guys looked over at what the Credit guys were doing, thought they were all bonkers and quietly carried on making money for their banks. And continue to do so. And the whole recovery of the banking revenues needed to repay the state depends upon them. Do you pay these guys nothing? These people did earn good money in the past (but rarely the types of figures mentioned), and there is a point at which they will think "Hang on. I am working my socks off, making billions for the bank, and getting a hard time from everybody. It is just not worth it. I will go and set up my own company with my mates X, Y and Z. Of course 75% of them will probably fail when they go off and try to do this, but in the meantime who is going to stay and make money for the bank?
(3) The guys who got us into this. These are the guys on the credit side of the bank, and the executives at the top of the banks who thought the ride would never end. Now, last time I looked, they all received nothing. I am in banking and I seriously do not know of a single person who was in any way associated with the mess getting a bonus.

and we are not talking about millions here. I have yet to earn anything approaching what I would be earning had I stayed in the Accountancy profession - in my very best year I made mayb ehalf of what I would get in the professions. Yes, I am still relatively well paid in absolute terms, but once you take off from my basic take home pay the cost of commuting and the cost of childcare to cover the ridiculous hours I have to do (I left home this am at 5.15, will get home tonight at 8pm and will work over the weekend), how much cash do you think I have left over? £10 a day. That's how much. That is what the 'basic' we get equates to. The whole reason you get this basic/bonus split is to pay the bare minimum so that everyone works their socks off 24/7 in order to show results and therefore get the bonus - just the same as any commission-only type job in you get in industry.

I am not weeping into my hankie over the fact that my bonus will probably be close to zero. I am aware that I am lucky to have a job (my brothers are about to go bankrupt, my brother in law is about to have his house reposessed. They are in normal jobs and I live in the real world too). I appreciate that I am really lucky to have work. But that doesn't mean that peple who nothing at all about the situation have the right to call people like me who do work in the banks and get some kind of a bonus "scum". If I decide that this £10 a day is not worth it and decide to chuck it all in, how exactly will that help the nanny who loses her job, and the ironing lady who does my ironing, and the guy at the railway station who gets made redundant because there are less commuters?

Thanks squiffy that's v interesting