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Crippled Wall Street giant and major City employer Merrill Lynch paid 14 of its bankers more than $10 million (£6 million) each last year despite racking up losses of nearly $28 billion.
Among the top earners is thought to be London-based Andrea Orcel, the company's top investment banker, who was paid a bonus of $33.8 million. Orcel has worked on some of the world's biggest deals in recent years, including the disastrous takeover of ABN Amro by Royal Bank of Scotland, which brought RBS to its knees. Some 53 high-flyers at Merrill trousered more than $5 million each as it paid a total of $3.6 billion in bonuses to its 59,000 staff globally, including thousands in London.
The lavish payments – mirrored at banks across Wall Street and the City – came after Merrill lost $27.6 billion last year and was forced into the hands of Bank of America in an emergency takeover to save it from collapse. The figures emerged today in a hard-hitting report into the “heads I win, tails you lose” bank bonus culture by New York attorney general Andrew Cuomo.
It came as US lawmakers moved to give Washington a direct role in deciding how much executives on Wall Street are paid.
The House of Representatives was tonight expected to pass legislation that would ban “incentive-based” pay that could threaten the viability of a firm or the wider economy.
Democrat Barney Frank, chairman of the House Financial Services Committee, said: “The problem with executive compensation is essentially – from the systemic standpoint – that it gives perverse incentives.”
A clampdown in the US would put pressure on the UK Government to follow, although Chancellor Alistair Darling last month ruled out a cap on bankers' pay.
Cuomo found that banks bailed out by the US government to the tune of £175 billion still paid 4793 bankers and brokers more than $1 million each last year in bonuses.
“When the banks did well, their employees were paid well. When the banks did poorly, their employees were paid well. And when the banks did very poorly, they were bailed out by taxpayers and their employees were still paid well,” said Cuomo.
“Bonuses and overall compensation did not vary significantly as profits diminished.”
Citigroup and Merrill Lynch together lost $54 billion last year, paid out $9 billion in bonuses and got government bailouts of $55 billion under the Troubled Asset Relief Programme.
At Goldman Sachs, Morgan Stanley and JPMorgan Chase, bonus payments exceeded income.
The combined earnings of the three firms was $9.6 billion, while they paid bonuses of $18 billion, and received taxpayer funding of $25 billion.
Goldman Sachs paid 953 of its 30,000 employees bonuses of more than $1 million, and 212 high-flyers trousered more than $3 million.
Only JPMorgan made more millionaires but that was out of a staff pool of 225,000. JPMorgan and Morgan Stanley paid 10 executives at least $10 million each while Goldman handed six staff more than $10 million. Cuomo said: “There is no clear rhyme or reason to the way banks compensate and reward their employees. In many ways, the past three years have provided a virtual laboratory in which to test the hypothesis that compensation in the financial industry was performance-based. But even a cursory examination of the data suggests that in these challenging economic times, compensation for bank employees has become unmoored from financial performance.”
Reader views (18)
Adrian says go back to sleep, stuped, "the British Government is up 3.5 billion" after seven years, mind you.
Tell that to the employees of bankrupt businesses.
- Janos Abel, London, 02/08/2009 14:43
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After almost a year, the repuation of the financial services industry stinks higher than a sewer in a hot summer, yet not one High Street or Merchant Bank has done anything to change things around. I would never trust my bank with my savings, investments or insurance, neither would I trust any financial advice they chose to give me, yet this same bank, bailed out by the UK last year, sees fit to fritter their bale-out on lavish corporate sponsorship, even more lavish parties & junkets and big bonuses for their staff. Right now, the UK financial services industry has a golden opportunity to restore faith in itself, yet for some undisclosed reasons chooses not to. I would love to know why the High Street banks are still the worst places to save or invest in, and also, would love to know why they are still trying to hoodwink customers with one-sided financial 'customer review' advice.
- Joannie, London, England, 01/08/2009 23:58
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A friend of mine got promoted there last year works in support not responsible for these losses, they got no payrise and a bonus of 3K. Bet they'll be looking for a new job if they've read this.
- Anon, London, 01/08/2009 10:35
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May the bonus is for getting suckers to buy
their companies products.Some will sell junk to their grandmothers.
- Lesliest, BramptonOntario.Ca, 01/08/2009 00:42
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Gross amounts of public money mean gross amounts of greed and abuse
- Edwin, beaconsfield buckinghamshire, 31/07/2009 22:17
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Funny thing..those writing in and complaining and moaning that people write in to moan and complain. Irony or just daft?
Life is unfair.yes..but we should have let these Zombie banks fail..to back up that statement. Actually..no..it would have been a fairer world if they had failed..with depositors covered naturally.
- Corbo, Norwich England, 31/07/2009 16:09
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Stop complainning
£160 Billion pounds for UK banking sector from 2000 since 2007 resulting in 32 Billion in corporation tax
£70 Billion pounds paid in bonues for same period resulting in 31.5 Billion in direct taxation.
Total tax revenue 63.5 BILLION POUNDS
60 BILLION Bail out so UK PLC is up 3.5 Billion
- Adrian, London, 31/07/2009 13:49
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Elmo, it's not envy it's disgust. Disgust at greed, disgust at the bankers who gorged on that greed and disgust at the spineless ELECTED politicians who've let this happen.
Your attitude suggests that if Hitler came knocking you'd stick your head in the sand and hope it all comes good........it didn't!
- Bobby Smith, london, 31/07/2009 13:46
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It's all very well blaming a handful of bankers. But the general public also need to take responsibility for the financial mess that we are now in. At the end of the day everyone seems happy to bleat on about how the bankers mismanaged the finances but so has the public. Lots of people took on mortgages they could ill afford, have numerous credit cards that they have no intention or means of paying off and loans. I know many people that used the 'equity' in their house to re-mortgage and have a great time buying materialistic items and holidays etc. Yes they have to pay now but unfortunately most have nothing left to pay with and it is again left to the people with some savvy who did save and didn't spend every penny of theirs and the banks that they could get their hands on to foot the bill for all the write-offs and defaulters.
- Jl, London, 31/07/2009 13:33
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Bobby and Ross, My point is you should get on with your own lives and never worry or waste energy whining about what's unfair in life. Maybe you guys are missing the point but are blinded by envy?
There are so many things that are unfair about life - the randomness of inherited illness, or the parents you are born to or just plain bad luck. You guys who are getting all fired up with envy about people you don't know who have more money than you - you need to consider what's important in life - and believe me it aint money that is important!
- Elmo, Barnet, 31/07/2009 13:15
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elmo - we are paying for these banks to stay in business - its our taxes that have bailed out the failing banks
if individuals want to make million pound bonuses let them move to a bank that has not been bailed out by public money.
- Ross, london, 31/07/2009 12:33
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Elmo, you don't get it do you? The way the bankers are treated has resulted in a 'playing field' that is far from even. Every pound of taxpayers money that goes in to the pocket of an investment banker is a pound that doesn't go to the NHS, education etc etc. MY vote confers power WITH responsibility. The way the bankers are getting away with the disaster that is the economic downturn is giving them power WITHOUT responsibility. That, my friend, is totalitarian!
- Bobby Smith, london, 31/07/2009 12:16
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Understandable outrage about unfair rewards but inverted snobbery and communist era economics are just divisive and patently invalid. It's tempting to imagine all traders are public school boys if your perception is rich=private education. In fact the great majority of traders - the risky, high bonus types Richard and Bobby object to - wouldn't be able to name a public school if they tried. They would be able to direct you around Essex and Kent. Don't confuse short term, irresponsible, high risk betting by traders with some dream that private schools produce enough people to man the entire British banking system.
At some point reality must intrude on the ideas of even the hardest line neo-Marxist? Surely? Or do we all abandon capitalism in favour of yet more social engineering and liblab fantasy economics?
- David, London, 31/07/2009 12:06
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Whinge, whinge, whinge from people who have little understanding of what they are complaining about .......it's getting tiresome now...move on , every one of you.
Bobby Smith, you ARE completely in charge of your own destiny, you always have been and you always will be. But if you get hung up on what others have and what you don't have, especially if it's a notion of other people's material wealth, then you will never make the most of whatever your talent in life is.
- Elmo, Barnet, 31/07/2009 11:47
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Our culture of values have to change radically. How many bank bosses were knighted for the sake of having so much money? Once a banker friend told me that they worked so hard that they deserved their bonuses... So so many nurses, doctors, teachers and hard earning people do work so hard or even harder than them.
- Maria, London, 31/07/2009 11:04
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Politicians around the world, especially those in the US and the UK, have swallowed the bankers lies that if they don't pay massive money then the bankers will leave and go elsewhere. In a democracy the vote you have should give power to the politicians to deal with these issues, not to see this power delegated to rich bankers! The fact that taxpayers money is used to directly pay these already wealthy people should send shivers down every voters spine and demonstrates that this is a crisis of huge consequence. We now live in a country where laws are passed and tax is levied specifically to allow the bankers to become all powerful WITHOUT the repsonsibility we would normally insist on. No longer can we say that we, the people, are in anyway in control of our destiny as this has now been outsourced to unelected, public school educated, self centred and greedy investment bankers whose entire reason for existence is to generate profit for themsleves WITH NO reference to wider society. I see this as the start of a divided nation and believe that the majority, once aware of the theft of OUR wealth, will cease to vote and will take matters into our own hands. The city and canary wharf will burn.
- Bobby Smith, london, 31/07/2009 10:20
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These abuses will continue until we have a socio-economic system in which decent, honest, truly productive work is rewarded rather than this parasitic zeal to make money out of money. These horrid people are just creaming off the wealth of the world and it seems they have no shame.
- Richard Kennard, Welling, 31/07/2009 09:54
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Wouldnt the photo be more appropriate if they were all sticking two fingers up at us? those in the UK included....
- Dac - Ealing, London, 31/07/2009 09:26
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