Showing posts with label bankers' remuneration. Show all posts
Showing posts with label bankers' remuneration. Show all posts
February 07, 2009
The Royal Bank of Scotland (RBS) is proposing to pay close to £1 billion in bonuses to its staff, just months after it was rescued by a £20 billion taxpayer bail-out, The Sunday Telegraph can reveal.
The bank’s board has begun discussions about the bonuses with UK Financial Investments (UKFI), the body set up by the Treasury to manage the Government’s shareholdings in Britain’s ailing banks.
The scale of the plan is likely to increase public anger as the recession deepens, and add to the frustration of ministers. It comes as Alistair Darling, the Chancellor, announces in The Sunday Telegraph today his plans for an independent review of the way banks are managed, including the bonus system.
The review, which ministers hope will address voters’ concerns about big payments to executives, will examine the roles of directors and institutional investors and study how British banks compare with overseas institutions.
“We cannot return to business as usual,” writes Mr Darling in this newspaper. “It is in everyone’s interest to get banks’ governance right. It would be wrong to reward people whose excessive risk-taking brought the banks down, causing misery to millions of their customers.
Success should be rewarded. Failure should not.” The Chancellor will announce the detailed terms of reference of the review, and its chairman, tomorrow. Royal Bank of Scotland to Pay Staff £1 billion in Bonuses >>> By Mark Kleinman, City Editor and Patrick Hennessy, Political Editor | Saturday, February 7, 2009
THE TELEGRAPH: Bankers Must Accept the Big Bonus Madness Is Over
Am I in favour of radical curbs on bankers' salaries? You bet I am, says Martin Vander Weyer.
Years of hindsight will be required before we can pinpoint all the intersecting causes and unintended consequences that created the current economic crisis. But there's one factor that really has been more extreme and more pernicious this time than in any previous boom-bust cycle: the pay-scales of bankers.
In my view, the collective risk judgment and moral compass of the City and Wall Street became utterly distorted by the possibility that bank employees could earn life-changing bonuses, year after year and at little risk to themselves, by pushing markets beyond reasonable limits. That, I believe, was the crucial factor behind the unprecedented credit crunch, which is driving us towards something far more frightening than any normal recession. So am I in favour of radical curbs on bankers' pay? You bet I am.
Now let me qualify that opening statement. I used to be an investment banker. In fact, back in the Eighties when the seeds of the mega-bonus culture were sown in the City under American influence, I was as keen as anyone to know what my annual bonus was going to be. It never amounted to a hill of beans compared to today's millions, but still I know from the inside how the psychology works. And I saw how people were changed by the possibility of easy wealth – the aggression, the politicking, the boastfulness, the death of loyalty to the employer, replaced by loyalty only to small teams which might sell themselves from one employer to the next.
By the time I got ejected from it in early 1992, this was a pretty unpleasant milieu in which to work. But what I also know from the inside is that not all bankers are what the tabloids now call "guilty men". Many are sincerely troubled by a sense of shared responsibility for what has gone wrong. I recall a City lunch as far back as April 2005, when a group of senior money-market traders told me that the hugely lucrative "credit derivatives" market, a key component of this winter's financial cataclysm, was dangerously out of control. For another two and a half years, the banking community as a whole – whether cynically ignoring the risks, or blinded to them by the possibility of seven-figure personal rewards – carried on slicing, dicing and churning the debt instruments that turned out to be so toxic.
As a result, small businesses will fail for lack of bank credit, jobs will be lost, savings will be destroyed. The causal connection is direct, the damage is done – and the culture has to change. This can't be allowed to happen all over again in 10 or 15 years' time. Banks have to find a way to expunge the greed that corrodes their profession, and that won't be easy. But it will be much more effectively done if it happens from within than if it is imposed by government.
How so? Surely President Obama has shown the way by slapping a $500,000 annual limit on executive pay within banks that require "exceptional assistance" from the US government in future? But the key words there are "in future": the limits are not retroactive. Many firms that have already had some form of federal support are not caught in the net. Most likely, the restrictions will create an incentive for banks in the danger zone not to ask for government help until it's too late, while their best staff depart for other banks that can reward them without outside restraint. >>> By Martin Vander Weyer | Saturday, February 7, 2009
The Dawning of a New Dark Age (Paperback & Hardback) – Free delivery >>>
January 21, 2009
THE TELEGRAPH: Bosses who wrecked rock-solid institutions walked away with millions - leaving us to pay for their folly.
Before the internet age, it was a rite of passage, a feeling that you had finally grown up and were considered responsible and trustworthy. As children, many of us might have had savings accounts or a few pounds in a building society deposited by an ageing aunt.
But to get one's first cheque book was something special. Mine had the words National Westminster Bank written on the front, an imprimatur that could hardly have sounded more rock solid and British to the core, a guarantee of probity and quiet competence.
In those days, banks were forbidding places; there were no open plan offices. A visit to the bank manager, especially for an impecunious student trying to explain a £20 overdraft, was a terrifying experience conducted in a sternly avuncular manner from behind a large desk.
We all knew that such a world had disappeared. But it was none the less astonishing to wake on Monday morning to discover that the Royal Bank of Scotland – my bank, or at least the NatWest bit of it – had posted the biggest loss in British corporate history. >>> By Philip Johnston | Wednesday, January 21, 2009
The Dawning of a New Dark Age (Paperback & Hardback) – Free delivery >>>
October 08, 2008
MAIL Online: Gordon Brown and Alistair Darling today signalled that the era of boardroom fat cats is over for banks forced to accept help from the taxpayer.
The Prime Minister and the Chancellor made it clear that directors and senior executives will be expected to accept far less lavish pay packages in return for the Government bail-out.
Boardroom pay in the banks has exploded in recent years as their profits have swelled.
The four banks seen as most likely to make use of taxpayer funds - HBOS, Barclays, Lloyds TSB and Royal Bank of Scotland - paid their directors more than £64million last year.
The best-paid chief executive was RBS's Sir Fred Goodwin, who earned £4.19 million. Initial reports that Sir Fred and RBS chairman Sir Tom McKillop would be forced to stand down as part of a deal with the Government were swiftly denied.
Sir Fred has been heavily criticised for buying Dutch bank ABN last year as the credit crunch began to unfold.
Although the Government has no legal power to impose pay ceilings, it will have massive leverage over any bank that has the taxpayer as a major shareholder.
The Government will also want to be reassured that traders are no longer rewarded with huge bonuses for taking massive risks.
At a press conference this morning the Prime Minister said: "We're insisting in the individual negotiations with the banks that we have to be satisfied with executive remuneration." Fat Cat Bank Bosses Facing End of Massive Pay Deals in Return for Taxpayer Bail-out >>> By Jonathan Prynn and Sri Carmichael | October 8, 2008
The Dawning of a New Dark Age – Dust Jacket Hardcover, direct from the publishers (UK) >>>
The Dawning of a New Dark Age – Paperback, direct from the publishers (UK) >>>
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