Bob Diamond of Barclays

[newwave]

12 million salary AND now in line for a 9 million BONUS

"Dave" is now wiping the spit out of his eye.

I await with baited breath "Daves" fire breathing condemnation of this obscenity of greed the same as he would if the public sector workers went on strike for a pay rise.

Still "We are all in this together" says "Tax avoider" Gideon "trust fund" Geeko in a message from his ski holiday in Kloisters with his banking mates.

No doubt someone will tell me it's the "politics of envy"

Pelvic - if you look further up the thread Sat 05-Feb-11 11:09:30 you will see I distinguised between investment bankers that are doing advisory work (ie no risk taking) and traders (ie risk taking).

I use investment bankers as a collective term for the sake of simplicity.

BeenBeta, sorry but traders do not get 50% of their P&L.

Many investment banks pay out 30%-60% of their profits as compensation but that does not imply that a traders who makes $10mm gets 30-60% of that as as compensation. The support staff such as Middle Office, Back Office, IT etc have to get paid out of this, never mind the other front-office staff such as sales-people, marketers, research analysts etc.

Most market-makers get paid between 2%-10% of what they make. This percentage will be adjusted for sales credits, to create a post-attribution number. It will also vary according to the intrinsic value of the franchise.

Prop-traders get between 10%-20% of their P&L. They get a higher percentage since they do not have client franchise to rely on.

My DH is a partner in a hedge fund so he is very aware of the "going rate" for IB traders and gets consultancy surveys giving averages across the industry. Remember HFs charge 2% management fee and 20% performance fee. So no trader in a HF gets more than 20% of their performance (and most 10-15% after costs). If banks paid out 50%, people like my DH would have stayed at banks not left in droves for HFs!

The only people that get 30%+ are in bucket shops but these tend to be very small outfits not major investment banks or hedge funds.

siasl - "many investment banks pay out 30 - 60% of their profits as compensation."

Yes that is what I am saying too. My last job in an investment bank was to work out the forecast budget for our division.

Without going into laborious detail. Even the most obtuse heads of trading desks knew full well that theyy had to subtract their own variable costs (eg financing, travel expenses) and allocated fixed overhead (eg IT, compliance, clearing/settlement, rent) from their gross trading profits to work out what their desk had 'made' in net trading profit each year.

After all the costs had been subtracted and the net trading profit had been worked out then about 50% (sometimes more) of that net profit was allocated to the bonus pool. The other 50% went to pay dividends and bolster the retained capital base.

Typically junior staff received proportionally less share of the pool and senior staff taking the lion's share. Yes, the top traders were probably taking 60% of their personal share of net trading profits in basic, bonus and emoluments as you say That is a huge amount in some cases.