RBS bonuses - just a thought...

[GrimmaTheNome]

The news that the board of RBS was threatening to ?.htm" REL="nofollow" >resign if they aren't allowed to hand out bonuses makes me wonder what would happen if in response, everyone with an RBS savings account contacted them to say they'd withdraw their money if bonuses are paid.

I think I would if I had an account - but DH manages our money and hasn't touched them with a bargepole for years.

No idea what happened to that link, I c&p'd it - but I'm sure you've all heard the story.

who cares if they resign? its not like they are good at their job, if they were they wouldn't be in this mess. also i'm sure there are no shortage of people to fill their posts considering how many redundancies have been made in the financial sector.

Exactly Nancy

This is the Gernments chance to stand up and say Eff off with your bullying, frankly

Bonuses come in two levels: ofcourse the lwoer paid staff shouldn't be denied theirs, many aren't on far above minimum wage. But the really big investment ones are a msytery to most people I think,and wuld be better replaced by competitive salary (RBS said to be lowest payers) and sensible bonus scale, things in the £thousand range, not stupid amounts that dwarf many people's lifetimes earnings.

I wouldn't mind quite so much if they could come up with bonus schemes that encouraged long-term growth rather than short-termism. Share options ought to work, because you have to wait to get them so (a) you have to stay with the company rather than jumping ship and (b) you're then motivated to ensure the company is in good shape in the future.

No, I don't much care if they resign but I'd like it to be clear to them that its not just the Government who wants to put a stop to the banks' excesses.

Absolutely agree with Grimma about encouraging long-term growth rather than short-term wins with no thought to possible future impact.

RBS is to all intents and purposes state-owned, at least for the time being. While this remains the case, meaning until RBS have paid back the hundreds of billions required to bail them out, then they need to remember that the employees are effectively civil servants.

I am all for a free economy and think that reward-driven benefits frequently work, and are frequently well deserved. They are also required to retain top talent. However, now is not the time to be paying these bankers million pound bonuses. There are many, many people suffering severe financial difficulties, not least because of the finance sector fucking up so spectacularly.

It always cheers me up when I remember that they have to pay 40% of their bonuses in tax!

Quite agree. They fucked up big time, why should we be so desperate to keep them on?

Jeff, except that (as discussed on another current thread) these guys often have tax evasion dodges.

And anyway, even if they pay 40%, they get 60% of other peoples (ie our) money.

Sadly Peachy, the lower paid staff are unlikely to get any bonuses.
As you can tell from my (new) name, I know something of how RBS treats its staff. For most branch/office staff, there have been no 'cost of living' pay increases for about 7 years or so now. So, if like my DH you are at the 'top' of your scale, that means no pay increases at all during that time. There is no paid overtime, though they still expect staff to stay late/come in early to keep work up to date. Staff who leave are not being replaced so everyone is doing the work of more than one person. No profit sharing last year ( rightly, as there were no profits) and no bonuses because the targets they set are impossible to achieve. eg, dh has a target to answer more calls per day than the entire office actually receives. And there are 20 staff with the same target. I don't even mind the fact that there are no bonuses/profit sharing, but when you are only earning a salary of £ 18,000, and trying to support a family, in this area, that really doesn'tgo very far!

Bloody hell RBSwife, that's rough. And despicable when they are paying other people - who, let's face it, are only doing well because they've been a. bailed out and b. the government pumped money into the financial economy and banking system - million pound bonuses.

Gives the lie that that line about bonuses for hard work - if they were in any way related to effort, your husband would be getting one as would other staff in the high streets.

Yeah, don't get me started on why I get so mightily p!$$£d off when it assumed that 'hard working' = high bonuses or other income. My DH has worked hard for RBS for many, many years and along with all the other staff in his office, all they ever seem to get for it is yet another kick in the face. Unfortunately, like so many of his colleagues, he is now at a stage where it is pointless even trying to move elsewhere as retirement is looming and he would actually lose more than he would gain if he were lucky enough to find something else. He just hopes to be able to last out the next few years until he will get his work pension and then get something different to help out. Not good when he could earn more in Sainsbury's as a checkout operative though, is it?

So..... imagine that you have 10 schools and one of them is failing and has had lots of government investment in it. For every successful child that gets 5 GCSE's the government gets back part of it's investment, because the child goes on to work hard and pay taxes or whatever. And if the school fails and closes then all the children are condemned to no education or one so bad they will never get a job and will be a burden on the state.

So, it's extreme, but it happens.

Now imagine what will happen in that school if the government turned round to the teachers in the failing school and told them if they had done their jobs properly the school wouldn't be failing so it's they are going to cut all the salaries in that school by 70% - including the salaries for anyone who joins that school from another one?

How many good teachers will join that school to turn it round? How many of the good teachers already at that school and trying hard will stay? Some possibly of course, but would you advocate that cutting the salaries of anyone who works in a failing school is the best way of turning it around? Of course not. In fact you pay the really good people more to go in and turn it round.

Just because we are talking about bankers and not teachers does not change the underlying rational here of how you turn an organisation around. What is different of course is that the people involved already earn loads of money and are certainly not altruistic in nature nor deserving particularly of sympathy. But if you create an imbalance such that all the bankers in one organisation earn three times as much as in another, then the good bankers will certainly all move to the high paying organisation, leaving the crap people to fill the places in the low-paying organisation. Which doesn't really achieve the long term objective of earning back the money the government has spent (but it will of course bolster up all the competitor organisations, and lead to them earning lots of money).

Of course, you could just say 'let it fail, and we'll see what happens then' or 'cut the salaries and we'll see if they all leave' but what's the risk here? If you get it wrong the taxpayers (YOU) lose everything and your own taxes go up. If you pay the bankers market rates then it sticks in the throat but you might actually get some money back. Your call, but I don't see the point in cutting off your nose, generally.

Of course, the argument of whether bankers get vastly overpaid in general is a valid debate to have. But that has to happen on a global level and not a local one. Just as you can also debate whether nurses are vastly underpaid relative to their merits. Most normal people would say a resounding yes to both questions. But the world has learnt that if you increase nurses salaries in one country (eg UK) relative to the rest of the world then the places where the good nurses are needed most (Africa) find all the best nurses upping sticks and moving to the UK, thus depriving the desperate nations. In that sense, bankers and nurses are similar - the best will gravitate to where they are appreciated most and rewarded most, the worst will drop to the already deprived areas. RBS is our Africa, in the banking sense.

Anyone who says 'I'm sure there are plenty of people to fill their jobs' is correct. There are. But would you rather have good people looking after your money, or the crap people who can't get a better-paid job anywhere else?

I don't work at RBS, but where I do work I am hiring at the moment, And 90% of the applications I have in front of me are from RBS people (good ones) who are desperate to move out because they are not being paid the market rate, and are totally demoralised because of the ear-bashing they get from a hostile media and demotivated because they see their good colleagues pouring out of the door.

I think you are constructing your argument on the foundations of a fairly big mistake there, Squiffy.

You are assuming that there are 'good' bankers and 'bad' bankers and that you can spot the 'good' ones because they earn million pound bonuses.

I suggest the banking crisis is a teeny weeny hint that this might not necessarily be the case.

There's a lovely picture of Hester, the chief exec of RBS, in the Guardian today - sadly can't find it online.

He's out hunting - curry combed horse, wearing hunting pink, looking every inch the wannabe toff who should be second up the wall when the revolution comes. (First is Fred Goodwin.)

Imo this is all government spin because we're so close to an election.

The government are saying what the people want to hear but there's no way they'll follow it through because they won't want to risk the RBS directors carrying out their threat of resignation.

And regardless of what people think of bonuses/whether we can recruit others to replace resigned directors, if the board of RBS resigned on mass it would throw the bank back into crisis.

And reality is that one of the things that drives people most is money. And if RBS is the only bank that doesn't receive bonuses then the only people it will be able to recruit will be those that can't get work anywhere else, in which case you need to question why, and whether we want them running a tax-funded bank..

Stillsquiffy - imagine 10 schools all doing a reasonable job educating children. And then they all have to sack lots of teachers to finance the public spending cuts that will be needed to bail out people in your industry, who are continuing to pay themselves enormous bonuses.

How does that sound?

How does one become a "good" banker...with experience.

If these so called "good" bankers left, others on their way up the ladder would be more than happy to take their jobs for a fraction of the salary. Imagine the interview in 10 years, "yes you can employee that other bloke but he ran when the going got tough at RBS I stepped up and in 5 years repaid the tax payer"!!! Now that is what most would want on their CV.

The current bankers should be careful aterall graveyards are full of indispensible people.

I don't have a problem with anyone getting a bonus if they have performed well enough to earn it.

However, DH works in the lower level of the banking sector (not RBS) and was rightly pee'd off this week when it was announced that the lower band employees would get a bonus of between 5 and 10% of their pay if they met target, whilst those on the upper bands would get up to 50%.

So 5-10% of not a lot is er...... not a lot, whilst 50% of a lot is a whole lot more!!

Nice to see the pay divide widening

Anniek, nice in theory, but you should talk to the headhunters and recruiting agents - no-one will go into RBS. The only people who are happy to go there for an interview are already out of work and have been told to go away by most other banks. They will happily take the jobs, yes, but they have generally been laid off by their own firms because they are fairly incompetent. In fact the people who got us into this mess have all already been fired, so there's a fair few of them probably still job-hunting.....). And whilst I am sure that being one of the people to 'turn against the tide and go save the bank' would look bloody good on a CV, it requires a level of altruism and long-sightedness which most people in the city do not generally have in abundance (nor will they until far more fundamentals of wealth distribution are addressed), and you are asking these people to value altruism and a challenge with no guaranteed outcome at a time when the best performances come from people at an age when they are starting families and need to justify their 80 hour weeks and stressed lives to their loved ones. 'Looking good on the CV' is no substitute for 'Twice as much money somewhere else and less flak'.

And can you spot a good banker because he is the one who makes a million pound bonus? No. He is simply a good negotiator who has persuaded his bosses that if he makes the bank, say £20m, they will pay him £1m (to be clawed back if they money made is not rock solid) and they keep the other £19m. The good bankers are far further down the food chain and on nothing like the millions bandied about. They are lawyers and accountants and statisticians and dealmakers who in a very good year will make a bonus equal to their base salary. Enough to maybe live in a small terrace in Balham and send their kids to a nice nursery and perhaps if they are really good they will have enough to fund two kids through private school. So they are definitely very rich in relative terms to the average salary in the UK, but not so rich as to be deserving the witch hunt they are subject to. And can you spot the good ones? Yes of course you can, just as you can spot the good teacher in the school and the good doctor down the surgery, and it is nothing to do with their millions or their posturing.

Gustave - the point you make is exactly right - and if you have dross running the banks that are owned by he government whilst the good people go off to other banks, you will fairly well guarantee the outcome you envisage. In fact the really disgusting thing about 2009, and something everyone should be getting really really mad about, is that the banks that didn't receive funding (and are therefore picking up the brightest people and paying the biggest bonuses) only made their money this year because the government stepped in to underwrite the whole market. Those people in other banks have made a killing because of the money being ploughed into RBS, and they will pocket all the money without much market comment, because everyone is focusing on the guys in RBS itself. That is where the daylight robbery is (if you want to use such a term). And that's why the government is (as it should be) looking at taxation across the whole sector.

If they find a way of taxing the industry itself in such a way as to (a) capture the very rich people at the top and not just the middle-ranking staff, and (b) capture the money without risking a drop in tax revenues caused by a flight away from the UK by the people who currently contribute disproportionately large absolute amounts to the tax pool, then they will at last start to address some of the crazy imbalance of wealth distribution in the country. But that is going to be quite difficult and will only work with global co-operation by all tax authorities (which is actually looking much more of a possibility now that Dubai has 'joined the party' and so looks less likely to be an alternative FS location)

But I don't think the media can emote all of that in their headlines, so they stick with RBS, which is easier for joe public to get riled about.

If it is any consolation, history shows that the great depression resulted in a huge redistribution of wealth from the fat cats of their day. Average salaries in the financial services were very inflated before the crash, and dropped like a stone over the next 10 years. So history suggests that the outcome everyone wants (cutting the crazy excesses in the city) will possibly come about. The risk is that the Govt tries to do it too early and unilaterally within just one organisation or just the UK FS economy, and thereby destroys it, and loses the money poured into it....

There's a story in the Obs today about the govt. putting a windfall tax on bonuses in the pre-budget statement. Would like to see it.

As for "the people who currently contribute disproportionately large absolute amounts to the tax pool" - no, they contribute a proportion of their earnings, just like everyone else. Earn more = pay 'more' tax as an absolute sum, not as a proportion of your earnings. If you want to pay less tax, take a pay cut.

And actually, they probably contribute less than their fair share as they have access to tax experts who can exploit every loophole. See the post further down (or on the other thread) about one of the banks bringing in a big four accountancy firm to tell their staff how to avoid tax.

That means ordinary taxpayers are not only funding these bonuses, we are funding people to help the sodding public employees who get ridiculous bonuses to avoid paying their fair share.

This is immoral.

Yes, but Edam, what do you think happens when they stop paying UK tax, or RBS fails?

My posts are not about defending the people involved, but looking at what is best for UK Inc.

Exploiting loopholes is bloody annoying - but that is a legacy of the complexity of the tax laws in this country, which is a political issue and nothing to do with the current crisis. It needs all the parties to get together to agree a long-term overhaul of the whole tax system to clean it out, simplify it, and close the loopholes. Which personally I would support. But then the unions wouldn't like that because to would lead to high scale redundancies in the public sector, and often the areas where the public sector are the major employers are usually areas where there is little alternative employment prospects. Sometimes the cure creates insurmountable problems in itself.

The very very rich are globally mobile and will go where it suits them best financially - that's why there are so many rich Russians here and in France. They will never share their part of the burden because they will always find a route to avoid it. Not nice, but you can't unilaterally stop it.

i think there are 1,700 people in sunderland who would be more than happy to have a bash at their jobs ,should they all resign

To be fair to the people in the top jobs at rbs at the moment ,they arnt the ones who caused the crisis , however i still think you could give a guy who has been made redundant by chorus a shot at the job ,pay an advisor and still save some money in the wage bill ,but thats the yorkshire coming out in me

oh and before anyone comes back with the 'well you need alot of experience /knowledge to do the job' ,well i very much doubt the people who were instrumental in the near armageddon collapse of the banking industry were all wet behind the ears just out of uni types.
Just out of interest though ,how much are the people who are threatening to resign actually on ? and how long have they been in the post ? and how much has the retail sector of rbs made in the last year ,not talking the investment arm ,which i believe is doing ok .