No bonuses for bankers at AIB - why doesn't our country have the balls to do this too???

[granted]

www.ft.com/cms/s/0/e15826ea-06fe-11e0-8c29-00144feabdc0.html#axzz187gGhLWe

The Irish are refusing to pay bonuses to failed Allied Irish Bank. They said, not unreasonably, that the bank could, of course, pay any bonus it wished - but would then forego state aid.

Why the hell couldn't we do that here? Lloys etc - still taking home billions of pounds in bonuses, despite the fact they wouldn't exist at all if it wasn't for the fact that we all bailed them out.

And before anyone tries the old 'but we have to pay them huge bonuses, or all that talent will just flee overseas' bollocks, try this article for size:

www.dailymail.co.uk/money/article-1338328/Bankers-use-blackmail-payouts.html

Yes - I agree Brown and Darling slipped up there (probably too busy 'saving the world' ).

I'm sure that if UK banks require any further bailouts - Osborne will not be such a soft touch.

because they don't want their entire staff decamping to switzerland?

granted, i already know a few peole working in zurich, they have an amazing lifestyle, it is very attractive to the best people, which would leave us the worse off.

Yes our Govt should do the same.

I do not for one minute beleive that all our bankers would decamp to Zurich except for the ultra high earners.

I heard a plausible explanation on the news yesterday - AIB don't want to pay the bonuses, but it's in the staff contracts that they have to, so the Irish govt is changing the law to prevent the staff suing the bank.

The UK banks (which partly belong to us now!) want to keep what they consider to be their best staff, so they will have to pay the bonuses, & the UK govt wants the banks we have a stake in to be as profitable as poss so that our stake can be sold later for more than was put in in the first place.

("fleeing overseas" is bollocks anyway. all the big overseas banks have bases in London so they would just flee to them - if they were going to flee anywhere!)

(""fleeing overseas" is bollocks anyway. all the big overseas banks have bases in London so they would just flee to them - if they were going to flee anywhere!)" i don't understand this, ponders. do you mean that the AIB staff will come to their london office and expect to get paid?

it is unfortunate, i acknowledge, and leaves a bad taste, but these people are arrant money-chasers and will want to leave imo. sure, only the best ones will be in a position to be offered jobs elsewhere in the current climate, but that hardly leaves our state-owned banks in a good position if the best people have all buggered off.

no, I meant the staff of the UK banks in London would flee to other banks in London if they didn't get their bonuses.

No idea what the AIB staff in Ireland might do!

oh you mean the ones that the govt doesn't own and therefore couldn't deny bonuses to in the irish style? see i'm not sure that's such a good thing.

the bankers i have known are absolutely obsessed with money, painfully so. they would chase it wherever it went. they have bills to pay, lifestyles to support.

disclaimer - I have absolutely no knowledge of international banking!

But afaik London is full of big offices of big banks from literally all over the world, & if the staff of the bailed-out UK banks didn't get their bonuses, they could chase the money & still stay in London, therefore the bailed-out UK banks can't risk not paying bonuses. (I'm assuming the big international banks also pay silly money in bonuses)

(I think we're at cross-purposes actually Aitch )

Ponders - yes I see what you mean, that people from Lloyds etc wouldn't have to move country, they could 'just' get another job, although that isn't quite so easy as it was a few years ago.

I've got no problem with governments imposing restrictions on bonus payouts for banks which were bailed out if it is deemed appropriate.

Firstly, as article 2 in the OP points out, the idea that all the rich bankers in London will disappear to Zurich is bobbins - it's just a way of trying to put pressure on the regulators by threatening to leave. Secondly, so if it was true, is it really so bad? Bankers get paid a lot, and there are plenty more people in this country or indeed abroad, who I'm sure would be more than happy to work for the salary alone, without a bonus.

Thirdly, and most importantly, how 'talented' do you think these people ae, let alone 'uniquely' so? These are people whose business collapsed due to their incompetence - if they were that good, their business woudn't need bailing out. The reality is they took unacceptable risks without fully calculating and/or caring about the consequences, because they knew the taxpayer would pick up the tab if it all went wrong.

As the Irish govt correctly pointed out, they can either pay what the hell bonuses they like - but go bust - or accept that they don't deserve any bonus due to their incompetence, and gratefully accept the help offered. At least they keep their jobs - most people who work for companies that go bust in the recession aren't that lucky.

For bankers' salries, I am sure you can find any number of bright enough people to do the work. They are not unique and certainly not irreplaceable. Just greedy.

For the record, I have a close friend who is an investment banker - he's quite bright, but not exceptionally so (2:1 in numerate subject from respectable uni - hardly unique) - he's just VERY motivated by money.

"But afaik London is full of big offices of big banks from literally all over the world, & if the staff of the bailed-out UK banks didn't get their bonuses, they could chase the money & still stay in London, therefore the bailed-out UK banks can't risk not paying bonuses. (I'm assuming the big international banks also pay silly money in bonuses)"

Ironically I think the bailed out banks may need to pay a premium to attract the best staff. Why else would someone who's proved themselves in a 'non bailed out bank' move to RBS or Lloyds - not a great career move.

And granted - I'd say being 'very motivated by money' is as much a core competence for merchant bankers as 'not minding bad smells' is for refuse collectors .

granted - I totally agree.

Me and DW worked in the City (DW as an investment banker) and we often say what you said.

People in the City are really not that talented. They just think they are and have very big egos and an exceptional thirst for money. People would be amazed how much very ordinary people get paid for doing their job not very well. The whole financial crisis was created by apalling management failures and greed. All should have lost their jobs if not been prosecuted for gross failure of fiduciary duties.

Capitalism is a good thing as long as it is allowed to work. What people in the City did was expoloit regulatory failure, walk off with huge bonuses, then turn round to politicians (who were clueless) and frightened them to death with stories of economic collapse if banks were not bailed out.

The UK economy has been distorted by the City and it really needs to be reigned in by stricter control over the risks being taken and how that risk taking is rewarded.

Let those who want to leave walk off to Switzerland and replace them with a new breed of manager and employee. London will still be a very important financial centre but it will do what is supposed to do. Provide services and lend money to real businesses - not punt billions on a giant casino of uncontrolled risk.

i know they are owned by ireland, that's what i'm saying, kerry. that's why they can just do this or remove state input.

and god knows the bankers i know aren't brighter than the doctors i know, but their motivation is money, that's why they chased that career.

how would you say the salaries should be handled, beenbeta. a friend of mine has made millions for his bank this year, running a very successful dept (of something or other, my eyes glaze). he will not wish to be punished for the crimes of others.

None of us wish to be punished for the crimes of others, Aitch, but that's what's happening now to the Irish citizen. ?40M or no.

If your job is to make money, then why should you be paid for simply doing your job?

Scientists who come up with a patent which makes their company money (and really adds value to the world, not just redistributes existing dosh like bankers do!) do not typically get millions of pounds of bonuses. They might get a promotion or some extra share options.

I audibly cheered the Irish govt when I heard this news on the radio. Good for them!

paid for simply doing your job?

paid extra, obv.

well that's true, of course, on both counts. plenty of jobs, though, get bonuses, so i'm not sure it's such a great point.

i cheered too, btw, when i heard. i think it's great. good for us too, imo.

Sure, there are bonuses in other jobs - but they are never anywhere on the scale of bankers' bonuses. More often its a token 'recognition award' type thing, £10s or £100s in value not 6/7 figure sums bigger than a normal persons salary.

Aitch - "how would you say the salaries should be handled".

My view is that banks who are living on the public purse should be shut down and broken up and sold off.

In future, banks should be forced to hold a lot more capital against the risk they take. That would reduce their profits dramatically. That would for salaries down dramatically.

On top of that I would force a return to the old partnership system where senior managers had their own personal wealth at stake. It could be done if the Bank of England was given its old powers of regulation back.

Finally, force a separation of retail/commercial lending banking from 'casino banking'.

When I first left university I worked for a commodity trading company and the man who owned it risked his own personal capital along with the other senior managers every single day. I know how different that felt to the banks I later went to work for where managers had nothing at stake but their year end bonus.

force for salaries down dramatically.

I think people tend to rewrite history with regard to "casino banking".

Northern Rock, Halifax, Bradford and Bingley etc all went down due to an overeliance on wholesale markets. These were retail banks not engaged in casino banking. Retail banks lent out too much on to poor mortgages (100%+, self certified liar loans etc) and didn't have a large enough deposit base to cover this.

Lloyds was fine until Gordon Brown strongarmed them into taking over Halifax.

RBS bought ABN Amro at the top (very poor decision) and got involved in US mortgages (which had no experience in).

Lehman and Bear Sterns have more to answer for. However, they were investment banks that got involved in retail mortgage market.

Most of the errors came from banks moving outside their area of expertise.

Let face it, the "casino banking" elements of RBS made a profit in 2007-2010. In fact if UK taxpayers want to get their money back, the govt should selloff the retail/commercial bits and keep the casino bit!