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More bankers join bonus rush
Jonathan Prynn and Joe Murphy6 Feb 2009
Politicians today condemned a rush by thousands of bankers to pick up bonuses of millions of pounds before a government crackdown.
It emerged today that Lloyds Banking Group, 43 per cent owned by the Government, and Barclays, which has accepted billions of pounds in Bank of England loans and guarantees, have both awarded payouts to key employees.
A third state-supported bank, Royal Bank of Scotland, is also said to be preparing to make bonus payments to thousands of senior bankers and traders in the coming weeks.
Shadow chancellor George Osborne said: “It would be an insult to struggling taxpayers if the Government allowed banks we part-own to pay out big cash bonuses. To increase taxes on people earning £20,000 to pay the bonuses of someone earning £2 million is totally unacceptable.”
Although the payments will be severely down on previous years they are certain to reignite anger over City remuneration at a time when bankers are being blamed for the recession.
The Government warned the banks not to try to beat the crackdown on bonuses and excessive pay, which was revealed in yesterday's Standard. Ministerial sources said any bank that flouted public opinion by awarding exorbitant handouts, particularly before the changes take effect, would risk a massive backlash.
Lloyds Banking Group, now owner of its former rival HBOS, will pay bonuses to its senior London-based banking staff despite receiving £17 billion of taxpayer support.
But former HBOS directors and staff in HBOS's corporate banking division will get nothing. Any bonuses paid to Lloyds directors will be in shares and deferred for a year, a spokesman said.
Barclays, which has a far bigger investment banking operation than Lloyds, is set to make much bigger bonus payments over the next few weeks. Traders and bankers in its Barclays Capital division will get the biggest cheques but there will be nothing for main board directors. Last year employees at Barclays Capital got an average of £182,000 each.
Some of the biggest payouts will go to Wall Street-based former Lehman Brothers bankers. Barclays rescued its North American investment banking arm after it collapsed last September, inheriting an accumulated bonus “pot” of $2.5 billion (£1.7 billion) for the first half of 2008. A Barclays spokesman said the payout is likely to be smaller because of tough trading conditions in the second half of the year.
Eight former Lehman staff taken on by Barclays Capital in New York have reportedly been locked into contracts paying $10 million to $25 million a year.
The Government will impose strict limits on remuneration at banks that apply for government insurance to underwrite toxic assets and free up cash for lending. But this will only come into force after this year's bonus season, the most fraught in memory, has finished.
UK Financial Investments, the Treasury body that owns the RBS and Lloyds stakes, has said it is happy to see limited bonus payments to top performing staff if it was in taxpayers' interests.
Officials pointed out that those banks that seek bailout money from the taxpayer as well as those that are already part-owned by the state would have to discuss their finances and practices.
“The warning given by Lord Mandelson still holds that banks have got to be sensitive to public opinion,” said a senior source. “The banks cannot avoid sitting down with us and we have reserved the right to impose conditions on any bank seeking help from the public purse, which can include conditions covering pay and bonuses.”
Reader views (40)
Oh No Barclays didnt recieve taxpayers aid so why tarnish them with the same brush. No Barclays didnt but they have wittingly decided to allow Arabs to now part own it and it will only be a matter of time when they will fully own another British institution. Is this good for the country?
- Dc, London, 12/02/2009 12:35
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Throw the bankers out of their houses immediately and make them live on the streets. Then the money can go to build lovely flats for the homeless. CH
- Caroline, France, 09/02/2009 00:38
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Bank chiefs with cheshire fat cat grins
Are licking up the cream with a greedy thirst
Licking their bowls clean until they gleam
Then metamorphing
Into fat pigs
Their snouts in the
Treasury trough truffling
Quickly piggy banking their bonuses
- Risingflame, louth, 08/02/2009 12:01
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I think it's worth pointing out that IT contactors working for Barclays took at 15% pay cut in 2008.
This is how hard work is rewarded in this sector. Banks would fall apart if it was not for the work these people do, oftern upto 18 hours a day 7 days a week. Not the fairweather freeloaders that only need to work one or 2 years and then retire before the age of 30.
- Sam, London, 08/02/2009 09:28
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Liza's comments sum it up to me how these people think, oh you poor things, they deserve bonuses because they work till 6pm... Are you having a laugh at our expense still, I assume you work in finance too?? Come on !! How can anyone in their right minds expect a bonus ( which by definition is something given or paid over and above what is due, from profits ) when the company itself is effectively broke ? As tax payers we are collectively funding additional ski holidays for most of these financial whiz kids.
I agree the governments are to blame too,absolutely, but in these times to accept a bonus at the taxpayers expense is nothing less than repugnant. I am self employed and accept that in bad times you will absolutely have to earn less, why can't these people? When it all picks up again and they make profits then let them take a share, no problem. Just not NOW ! Revolting stuff and a very sad spotlight on their only true values in life.
- Martin, New York, USA, 08/02/2009 00:37
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I cannot see how I was responsible for trading worthless shares so that Bankers could earn huge salaries and bonuses. Then when like the Emperors New Clothes it all falls apart it becomes everybody's fault and the Bankers still expect their bonuses. Stop whining and accept that you screwed up and don't deserve bonuses paid by the taxpayer. An apology might be nice too.
- R Roger, Epping England, 07/02/2009 15:45
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Obama's plan for $500k cap applies to anyone who comes forward for money in the future. So the American banks that took billions in aid, it DOESN'T apply to them unless they request further aid! How likely is that given that they have taken what thay need already?
Headline grabbing news here!
Most of the people complaining today were the ones buying houses, borrowing multiple times their limit and then spending it like theres no tomorrow.. The regulator (FSA) and the Govt. allowed this to happen. EVERYONE (not just the banks) took advantage of cheap credit.
Where is all the corporation Tax? ..No doubt most of it was wasted by our inefficient Govt. and they haven't saved any of the billions either during the good times. The civil service is bloated and need to reduce headcount just like the banks. People are jumping on the bandwagon and zooming in on the bankers just like they all did to borrow and spend, spend, spend...banks just found the most profitable way to facilitate that...Its not right, its not wrong its called Capitalism!
… Like it or not GREED is a fundamental aspect of it and it boils over sometimes. If you don’t like it go and live in Cuba! There is no way the banks could have made those profits during the good years without non-bankers GREEDY greedy behaviour too.
The Govt has a stake in the bank and if it wants to sell it off it has to operate commercially. Apart from credit all other divisions have generated BILLIONS in profits! working 14+ hours day
- Steve, London, 07/02/2009 15:26
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Everyone is responsible for this economic mess - people who believed they could afford to take out 2 mortgages, people that didn't save and the press that continues to write negative, and negative stories about the economy and use banks as scapegoats - banks aren't parents, grow up people! The government should have regulated the industry more. The Clinton administration should not have encouraged banks to lend to people that did not have the funds to repay them - Under the Clinton administration thy encouraged lending to the economically disadvantaged by a point system that enabled banks to open up more branches if they lent more to these people who could not afford to pay their mortgages back.
It is easy to have a scapegoat (the banks) rather than looking at ourselves. When things are good everyone wanted to buy more and more - did the banks encourage it? Of course. Did the government? of course. Did society? Definitely! We are all responsible for this. The bankers do a thankless job. They work from 7a.m. - 6p.m. On average their base salary is between £40,000 - £100,000 not much for living in London supporting your family. It is a difficult and stressful job, I know of several people that have died of heart attacks in their early 40's. They don't get to have time off to take their children to school or a lunchbreak. By not paying bonuses to the ONES who deserve it - The best will and are walking away. I am afraid we are in for a long haul.
- liza, London, London, 07/02/2009 08:43
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1) Any bank that has received Goverment funding, should
be forced immediatley to return funds, if they have
millions suddenly available for bounses. Bonuses
prove they didn't require funding to "maintain a going
concern.
2) Like America, any institute obtaining Goverment
Funding, should have salaries capped.
3) There are plenty of redundant talented bankers looking
for jobs, that would be grateful just for a salary
to retain the roofs over their heads.
Claiming Goverment Bail out to pay bonuses, from tax payers money, is nothing less than fraud
- Theresa, London, 06/02/2009 19:33
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Am not saying bankers are blameless (I spent 2 yrs in the industry then saw the light and left awhile ago)but:-
i) Barclays didn't take government money, so am thinking whatever and however they pay their staff is up to them.
ii) People responsible for overseeing the banks (ie civil servants) still have jobs, unlike many bankers- and indeed have gotten pay rises and increases in their pension (at the expense of private pensions). Accountability anyone?
iii) Last time I checked Gordon Brown still had a job- despite the fact that he a) deliberately loosened financial regulation (contributing to the credit crisis), b) benefited from the increased tax revenue when banks were making money- this funded a lot of misguided government social policies and a bloating of the civil service c) overspent when times are good, leaving the UK in a precarious financial position, exacerbating the impact of the credit crunch. For him to talk about accountability when he helped create and benefited from the credit boom is hypocritical.
iv) The man on the street isn't exactly blameless- he was the guy who thought it was a good idea to buy a house with a mortgage that was 4 times his annual salary. Just as greedy as bankers are, then.
- Mike, London, London, 06/02/2009 18:25
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neither bankers, nor politicians have proved themselves worth their salt. they are increasingly the problem and rarely the solution, thus to reward them over and above
those that are honest,dedicated and actually benefit society is beyond the pale. we need a clean sweep to
sift the wheat from the chaff and thus far we only have those with a vested interest insisting they are anything
special.
- M.O'Brien, london.uk, 06/02/2009 17:18
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Immoral and shameful practice. -Bankers are no more 'hard-working' than anyone else. Just guaranteed to profit by investing other people's money! -And to ANON the IT person, -You should be paid a recognised rate for your 12-14 hr day, and not rely on bonuses. -What if your efforts were non-profitable through no fault of yours? No pay?
Working for nothing?
- Tony H., cumbernauld scotland, 06/02/2009 16:33
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Barclays Bank did NOT receive any Government money. They did not require a bailout. I do not see why they are being tarnished with the same brush as those who did require public money. Expose those who did not make it on their own and let those who have, spend their money as they wish!
- Akj, London, 06/02/2009 16:29
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I don't see that the banks need to give them bonuses in order to keep them as none of the other banks will be looking for fill jobs in the next few months, if anything they should take the bonuses and use it to pay the likes of me who isn't getting any interest to speak of on her ISA after years of saving and being prudent with my own money.
- Nu, london uk, 06/02/2009 16:21
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As bankers and Brown,by their incompetence,have caused most of this country's present problems and due to interest rate falls have reduced my income considerably, I am not prepared to see these people get ANY bonuses.Perhaps when they have remedied the situation we can consider giving them a bonus.
- Peter, Watford, England, 06/02/2009 15:43
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I work in banking but have been nowhere near the trading floor since I arrived there 5 years ago - I work in IT. I worked damned hard last year and believe me when I say that I'm embarrased that we as a bank find ourselves in this state, but why should I pay the price for the greed of traders and directors by not getting a bonus - I deserve one for 12-14 hour days, stress, etc just like someone who works in retail. The little people are just like everyone else and have mortgages, bills, etc to pay.......
- Anonymous, Hertfordshire, 06/02/2009 15:26
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This is truely obscene, how can banks do this , when they have borrowed millions from govt and send busineses and families to the wall at the drop of a hat, it is shamefull.
- Brian, Wiltshire, 06/02/2009 14:47
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Give em all P45's.
- Fly, london, 06/02/2009 14:41
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I am a Brit working in Germany, and to be honest i just can't understand how the normal tax-payer bails these companies out of trouble, and then the banks have the neck to pay bonuses to its staff of such vasts amounts.
If this is not taking the pee out of both the government and all the tax-payers, "WHAT IS".
Normal working class have to graft to earn a wage and if they mess up , they could lose their jobs. Here we have the banks who knowly over cook the acounts to try and get richer, quickier, and they were caught out . But what happens to them ......NOTHING.
- Mick, Germany, 06/02/2009 14:27
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Call me naive but surely the Chancellor when he bailed out the banks with our money had the gumption to attach some strings? If we own 40% of any business, I am sure that gives us rights to intervene and stop this obscenity?
- Colin Macpherson, Gramat France, 06/02/2009 14:22
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It is an utter disgrace that these individuals, especially considering the current economic times that we are living in, should be allowed to receive rewards for effectively performing badly. If this were any other profession a person would be swiftly and rightly fired for that level of incompetency.
However, what really enrages me is the rationale that's proferred by idiots like Darling and his equally stupid "boom and bust" cohort Brown...namely, that we cannot afford to cap salaries and suspend the bonus system because that will lead to an "exodus" of banking talent,...namely that they'll leave the UK and go elsewhere, thereby leaving the economy bereft of adequate skill and moribund of talent. What a load of TOSH! If the banking institutions accepted government aid and were bailed out (due to stupid decisions made by them in the first place) then that effectively means we the taxpayers are the ones footing the bill. Why should I be paying tax to bail out financial institutions who have the temerity and the gall to continue awarding themselves bonuses for failure?!!! It truly boggles the mind.
Thank the Lord that there's at least one person who's had the guts and the sense to put the people's needs first...and that person is President Barrack Obama. He's announced and made it clear that any of the banks on Wall Street that have been bailed out by the US treasury are now subject to capped salaries for their top execs.
- Ali Sichilongo, London, 06/02/2009 14:04
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Any bank which has sought taxpayers funding paying these bonuses should have their funding cancelled immediately, and be allowed to sink in a mess of their own making.
The banks would try to scare politicians by claiming this would bring the entire financial system down. It would not, for this would only need to happen to one bank and the rest would toe the line.
- Warren Hertzberg, London, 06/02/2009 13:50
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As majority shareholders the Government should call an extraordinary meeting of the shareholders and vote down any bonus award
- Andy, London, 06/02/2009 13:43
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This is criminal. It's our money - our money! Some taxpayers, who are helping to fund these bonuses, are the owners of struggling businesses who actually generate wealth and employ people. They're battling to make ends meet and bankers, who along with the Labour government are to blame for this economic crisis, are being paid bonuses with their money! Even the Americans have realised this cannot happen and have done something about it? Gordon Brown, will you stand up and represent us (even though you weren't elected by us)?
- Julian, London, 06/02/2009 13:42
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Banks run many different businesses such as FX, Equity trading and interest rate swaps. Largely these are profitable business which typically could net a bank 10bn in profits a year. However the issue is that a few business’ like structured credit have lost large amounts of money, say 30bn. Often these amazing losses are caused by a handful of individuals out of several thousand.
If it was for the profitable businesses (not responsible for any of the current problems) the situation would be a lot worse and banks would be reporting even great losses.
Unfortunately it is important that the banks pay bonuses to prevent the good people leaving. If one of the State-owned banks losses all of its good staff then the value of the company will devalue massively and losses will escalate. The Tax payers will then have funded a worthless company rather than one capable of turning a profit and this would be a waste.
The Board need to take responsibility so that the endeavours of so many cannot be wiped out by so few!
- Al, London, 06/02/2009 13:31
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Outrageous, banks that received bail out cash from the Government should not be allowed to pay out bonuses to their staff until all money and interest is paid back to the Tax Payer.
They perform they get bonuses (fair enough), they fail and get bonuses (Pathetic) they should be please they ahve a job!
- Samuel, UK, 06/02/2009 13:26
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Terence in Harrington. The average Joe Public, such as myself, did not buy property to make a quick buck. We bought property so that we would no longer be throwing away money on rent and might actually own something after 25 years paying extortionate interest rates to lenders! Maybe people /companies who bought to let did but not your average home owner.
- Kathy, London, 06/02/2009 13:21
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More dithering from Brown & Darling - Barak Obama has only been in office since mid-January & he's already imposed a $500k limit on executive pay in any financial institution taking taxpayer money. Why hasn't our Govt done the same thing? Gordon & Alistair have been fully aware of this problem since OCTOBER. They were warned that they needed to implement salary caps as a condition of providing taxpayer money to bail them out. What's the Govt reasponse - "The Government has warned the banks" and " Ministerial sources said any bank that flouted public opinion .... would risk a massive backlash." I bet their quaking in the gold-lined boots. Stop dithering Gordon and DO SOMETHING!!
- Malcolm, London, 06/02/2009 13:13
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If ever we needed some emergency legislation it is now. Something that prevents any bonus to any employees of any company that has been bailed out or given money from tax payer funds since January 2008.
Come on Gordon, pull your finger out and sort this.
- Louanne, London, 06/02/2009 13:10
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More bankers with their snouts in the Tax Payers trough. No doubt there will be a lot of hot air from politicians, but nothing actualy happening. Osbourne and his mates all hail from the banking industry, so ultimately they won't change anything.
- David, London, 06/02/2009 12:56
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You know what upsets me is the government runs to the aid of the banks who are to blame for this whole mess, they still get fat bonuses with MY money and the businesses are going bust and there is no one out there to help them. Obviously some have also not invested wisely but if more people lose their jobs, less money is going through the banks as well. Fine the execs personally for their bonuses otherwise I think I should get my money back!
- Aria, South London, 06/02/2009 12:43
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So whats new? Gov. will just keep on giving them more taxpayers money to bail them out as abd when and nothing will/has been done about the bonuses.
- Mike, London England, 06/02/2009 12:28
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Greed is good so we were told. Greed from the bankers to the average Joe Public who thought property was quick way to make money are to blame for the current mess.
- Terence Harrington, Canterybury, UK, 06/02/2009 12:11
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How much will we as unwilling shareholders be given in bonuses?
- Bob, Cheam, 06/02/2009 12:04
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These people are so out of touch with reality. The reputation of bankers has nose dived over the past tweleve months, they are not prudent and professional; they are just plain greedy. It seems there is money for themselves, so when the politicians and regulators demand radical change ( and they must re-regulate because the bankers are not competant to manage themselves), there can be no cry of "we can't afford it". You can. Time for the FSA to start biting.
- Joe, London, 06/02/2009 11:27
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The banking whizz kids and their managers who have created and encouraged those complex financial structures that led to the losses at no costs to themselves seem to have covered their futures very nicely.
For it's probably only they who have the detailed understanding of how to sort out the colossal mess of their own making.
Any government's dilemma now is that it has not only had to use taxpayers money to re-finance banks, but will probably have to pay the same people who caused the catastrophe big money to try and sort it out!
Feels a bit like being caught by the wheel-clamping industry.
- Barrie, essex UK, 06/02/2009 11:05
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SCS pay bands are signficantly higher than typical 'banker' basic salaries, for significantly shorter hours. If we penalise bankers perhaps all senior civil servants should hand back a slice of their salary too?
- Claudette Sands, London, 06/02/2009 10:42
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The banking whizz kids and their managers who have created and encouraged those complex financial structures that led to the losses at no costs to themselves seem to have covered their futures very nicely.
For it's probably only they who have the detailed understanding of how to sort out the colossal mess of their own making.
Any government's dilemma now is that it has not only had to use taxpayers money to re-finance banks, but will probably have to pay the same people who caused the catastrophe big money to try and sort it out!
Feels a bit like being caught by the wheel-clamping industry.
- Barrie, essex UK, 06/02/2009 10:38
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Sickening! What of the retirement plans of the many who saved responsibly all their lives, and now don't know which way to turn? All of the bankers who have acted so very, very irresponsibly over the past decade should be fired, not rewarded. That goes for the irresponsible politicians, such as Brown, as well. I can still see images of Harold Brown prancing around the beach imploring people to take out the never-never mortgages to get on the "property ladder".
- Phil Jones, London UK, 06/02/2009 10:36
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That will be the same politicians that award their own pay rises, employ their family and claim expenses for getting out of bed in the morning.
It is an unfortunate quirk of human nature that greed and corruption seem to be our most common traits since time began.
Might be time to stop printing this rubbish and getting many knickers in a twist and maybe concentrate all our efforts on sorting out the mess we have all contributed to.
It might make for slightly more upbeat reading and it might actually achieve something.
- Ron, Thane, 06/02/2009 10:09
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