Tonight:
5°c
Bail-out bankers will get their bonuses after all
Paul Waugh12 Feb 2009
The Government today gave up its bid to stop bailed-out Royal Bank of Scotland paying out bonuses to the dealers who brought it to its knees.
Ministers admitted privately that they were powerless to punish bankers who had contracts guaranteeing them payouts even though the bank is now 70 per cent owned by the taxpayer. Some are set to get five-figure sums.
The embarrassing retreat follows a week in which senior ministers joined in a chorus of criticism of RBS for intending to pay bonuses totalling a billion pounds just months after it was forced to take £20 billion in bailouts.
One Whitehall official said: "There is only so much we can do."
It was even being speculated that bonuses will go ahead next year as well.
And three quarters of staff at Barclays' investment banking division, Barclays Capital, which has made use of the Treasury's loan guarantees, will get a bonus this year.
The payments will be seen as a snub to public opinion. Eager to show he is addressing the problem long term, Gordon Brown today announced proposals to "claw back" bonuses from bankers who fail in future.
"It should not be a one-way bet," he told the Commons liaison committee. "In other words, if you fail there is a clawback which is also possible within a bonus system."
His announcement pre-empted the Walker Report on reforming City pay and bonuses, which is not due out until the end of the year, underlining the Government's fear that it is being severely damaged by the public revulsion that City blunderers are pocketing huge sums in the slump, some at the taxpayer's expense.
The Prime Minister was told by Treasury select committee chairman John McFall that such payments were "obscene", while former deputy prime minister John Prescott's Facebook petition condemning them reached a total of 25,000 signatures.
Gordon Brown told senior MPs that a massive overhaul of the rules could be unveiled as early as the Budget on 22 April.
He said: "The short-term bonus culture of the banks has got to end, and we are putting in measures that will bring that to an end."
He said the Financial Services Authority should have powers to penalise banks which failed to spread bonus payments over several years and reward long-term performance.
He also blamed a committee of experts for his appointment of discredited banker Sir James Crosby to be deputy chairman of the FSA, the banking watchdog.
"They said he was an outstanding individual with a strong intellect," he said. "That was the recommendation made to me in 2003."
Barclays Capital is to top up the pay of the vast majority of its 20,000 workers, according to industry sources.
It is understood that the highest bonuses will be paid to bankers in areas of trading that were highly profitable in 2008 such as commodities, foreign exchange and currency.
According to sources reported by Sky News those getting a bonus will get 50 per cent by the end of March, with the other 50 per cent split into four tranches paid over two years.
Barclays Capital has been one of the most profitable parts of the group during the boom years, but these collapsed by 44 per cent to £1.3 billion last year because of a £2.5 billion write-off on bad loans.
Earlier this week Barclays chief executive John Varley said bonuses across the group will be down 48 per cent, although they will still be worth around £600 million.
Between 25 and 30 per cent of its staff will not get a bonus for 2008.
Reader views (50)
If the bank is privately owned, the can pay whatever bonus to whoever they want to. But when the tax payer has to rescue the bank, no bonus should be paid at all. Remember, if the tax payer had not bailed out the bank, they would collapse and nobody would get anything!
How sick is our society that we reward people who are running enterprises to bankrupcy and get millions of £ for that???
- Kai, London, 16/02/2009 10:35
Report abuse
This nauseous government introduced a crime to the Statute Book known as "NON-SPECIFIC INCITEMENT TO MURDER" - a catch-all if ever there was one. Like much New Labour legislation, its specific although unavowed intention is to protect our esteemed and greatly admired MPs, government ministers, bankers and their rag-tag and bob-tail from condign and justified retribution. It is this legislation alone which prevents me from recommending the most effective and appropriate way of dealing with the bankers, ministers and civil servants who have brought the country to its knees.
- Aylmer Bulstrode, Verteillac, France, 15/02/2009 10:42
Report abuse
Mr Brown will want the Bankers to get their bonuses because they where following his orders. He wanted growth and he got it for a while. Now we will all have to pay for it.
- Stan White, leeds, 15/02/2009 07:35
Report abuse
does the captain of a ship that he runs aground get a bonus?
- M.O'Brien, london.uk, 13/02/2009 17:34
Report abuse
I wish I were a banker! Then I could also get away with the biggest fraud that has ever been perpetrated, lose my shareholders' money, cash in billions from the Government, wreck hundreds of thousands of people's lives, contribute to rising unemployment, bring the World economy to it's knees-and receive a massive bonus from taxpayers' rescue money. What on Earth do they think they're doing?
- Ray King, wood green london, 13/02/2009 17:24
Report abuse
BTW Harvey London
parts of teh bank have been very profitable and continue to be so, other parts have made huge losses. So choice is sell the profitable parts, but right now no one wants to buy OR continue to ensure it remains profitable with necessary risk control procedures....clearly creating an environment that results in the people generating the profits are likely to be poached by other banks (most likely US, Japanese or German) - is not good for the bank nor its shareholders......in my view the end game is to move RBS out of public ownership and therefore it needs to succeed and have the right people in place to ensure this...
- Martin_Clerkenwell, london, 13/02/2009 16:07
Report abuse
Of course they could have stopped the bonuses! When the 'bailout' was agreed this government should have stipulated that existing contractual agreements were no longer valid and that employees would be newly re-employed by the new owners on new contacts. What incompetence!
- Godfrey, london, 13/02/2009 13:57
Report abuse
I am doing my part! withdrew all my cash and plan not to vote labor at the next election.
btw, Martin_Clerkenwell, do you really think that by paying large bonuses out of taxpayers bailout funds will make this bank better in the long run?
In order to survive, RBS needs to do what other banks are doing: cutting costs, reducing overheads, and shedding staff. Problem is that if they were to do this in earnest, Gordon Brown would be blamed... so in the end, the bank will pay bonuses, keep staff, not reduce overheads and will therefore become increasingly uncompetitive over time... not really a business I would want to personally invest in, but what do I know.
- Harvey, London, 13/02/2009 13:21
Report abuse
don't like the way the bank operates???
take your business elsewhere...
however as the public are major shareholders of RBS, is it in our interest to see the best most competant staff leave.......the goal is to bring the bank back to profitability so it can move out of public ownership...losing the best staff may not be the best way forward....
- Martin_Clerkenwell, london, 13/02/2009 11:53
Report abuse
Well
at this point, why don't leave the bank, move to another?
At least there are still some in good shape.
What do you think?
- T, London, 13/02/2009 08:21
Report abuse
Greedy Bankers busted most of the Banks,how long before NuLabour busts the country?
- Stan White, leeds, 13/02/2009 08:02
Report abuse
When will you people realise that the proletariats future prosperity is directly correlated to the ability of these banks to hold on to their staff. These bankers have highly specialized skills accrued over many years and high intellects and thus are irreplaceable. The truth hurts but make no mistake: They are still "Masters of the Universe" and there's very little you can do about it......
- Jimbo, London, 13/02/2009 07:14
Report abuse
Gov't powerless to stop tax payer funded bonus payments to greedy bankers. Tell us another one!! We have to be the most gullible nations on earth. Wake up people of Britain before these bloodsuckers drain us completely.
- Humphrey Thornicroft, Perth Western Australia, 13/02/2009 03:31
Report abuse
What's New Labour's latest motto . . . " Failure! Failure! Failure!"
Well, haven't we all had enough yet?
It is my assertation that the people of Britain PLC have had more than enough of New Labour! After all, CHANGE is good!
- Fraser, Telford Park, 13/02/2009 00:27
Report abuse
God help us, we've become a corrupt country. Sad.
- Jo, Birmingham, UK, 12/02/2009 23:48
Report abuse
Maybe they are paying themselves out of all the bank charges that they have given out ever since the re-claims were put into suspended animation (sorry, meant to say temporarily put on hold) by the FSO.
Not to mention the Interst that they are probably getting from some off-shore bank account on the amounts that they haven't had to refund yet.
- Al, London, UK, 12/02/2009 23:41
Report abuse
... or to put it another way... a hard working average Jane or Joe (in fear of losing their job) will now be saddled with a tax bill running into thousands (if not tens of thousands) so some champagne swilling bankers can be rewarded for failure. Since this government has failed to the honest and decent thing here - lets hope the do the honest thing and stop banging on about "social justice", "fair society", and other champagne socialist slogans...
- Zady, london, 12/02/2009 23:05
Report abuse
I am at a loss, a bank posts the biggest loss in banking history in this Country, £28 billion I believe and then announces it is paying employees bonuses! What? They had written contracts that said they must be paid a bonus even if the bank lost money.
From what I can garner the bonus arrangements within most banks was that any profits would be split 50/50 and that employees would be paid 50% of the profits in bonuses over and above their contracted basic salary.
Given that the banks are publicly owned companies and not the provence of a cabal of partners makes the bonus arrangement of 50% of the profits paid in varying degrees to employees dubious practise worthy of attention from the SFO (Serious Fraud Office).
That employees are still to be paid bonuses after blowing the fortunes of shareholders and other investors then only avoiding bankruptcy with the introduction of taxpayers' money removes any doubt that the SFO and Police become involved.
- Robert, Dumbarton, 12/02/2009 22:34
Report abuse
"Get off your backsides and start working as hard as these guys do - - Jane, London"
Yes lots of hard work to bring the bank industry to its knees through greed and stupidity. Well worth rewarding. And then the requirement of my and others hard working tax payers to bail them out and they still want their bonus! I thought bonuses where given for success not failure.
- John David, London, 12/02/2009 21:35
Report abuse
No surprise there then, Browns banana republic.
- Paul, bolton uk, 12/02/2009 21:34
Report abuse
The banks should have been nationalised. As it is they are just taking a loan of us - or a bonus in this case. What kind of idiot heaps billions of pounds of tax payers money into a system which has gone bust due to massive greed and incompetence, without ensuring control of what happens to said money.
- Observer, Glasgow, 12/02/2009 21:23
Report abuse
Great news after a year of really hard work - yes work - that's a word lots of you don't seems to understand or partake in. Get off your backsides and start working as hard as these guys do
- Jane, London, 12/02/2009 18:36
Report abuse
what else would you expect why should greedy bankers take any notice from equally greedy politicians? it is hypocritical in the extreme as both are busy feathering their nests and totally aloof and oblivious to public opinion. however, the tide is turning and when the bank bursts all will be swept away and i doubt many will be willing to offer a merciful rescue.
- M.O'Brien, london.uk, 12/02/2009 18:10
Report abuse
Well of course they will.
Afterall, these devils know damn well where all Gurner Gordon's McLabour Treasurys' bodies are buried!
- Dave, cumbria, 12/02/2009 18:07
Report abuse
ye take note scottish bank
- Johnh, london england, 12/02/2009 17:43
Report abuse
Maybe those insensitive bankers and their personel whose jobs have been saved from oblivion by the Taxpayer can only understand one thing.
Let's run and take our money off any account we hold with these banks who refuse to see sense!
- John-John, London, UK, 12/02/2009 17:41
Report abuse
come on people lets get rid of this shower of rubbish government
- Johnh, london england, 12/02/2009 17:41
Report abuse
The greed, WHAT A BUNCH OF PIGS !
- Broke, London, 12/02/2009 17:40
Report abuse
So it was another foot in mouth utterance, just like the British jobs for the British.
Brown, please engage brain, even at this late stage. If you did, you will see the futility of your past actions and that you need to set another course.
If you maintain you cannot, please consider the interests of the country (including Scotland), not your pocket, step down (call an election) and let another do a proper job.
- Hugh, Middx, 12/02/2009 16:59
Report abuse
Holy Cow! Good news! Dunno how I'd have paid for the Lambo I ordered. Boy, am I glad I live in the UK and not in the US or France. It's off to The Ivy tonight!
- John Problem, Hackney Wick, London, UK, 12/02/2009 16:42
Report abuse
In the absence of the blank cheques from UK taxpayer those people currently queuing up for the payment of guaranteed bonuses would, by now, be unemployed.
Remember what happens if you bite the hand that feeds you...
- Jim, West Sussex, 12/02/2009 16:17
Report abuse
Gordon Brown and his clowns are useless. The voting public will not forget his allegiances to the greedy city boys and girls.
- Sharon, London, 12/02/2009 16:05
Report abuse
What Greedy PIGS!!!
- Enuff, london, 12/02/2009 15:54
Report abuse
Brown allows his rich banker friends to pick the taxpayers pockets has he no shame? Brown is turning the UK into a corrupt banana republic.
- Brian Edmonds, Farnham UK, 12/02/2009 15:53
Report abuse
I hope one of your readers can help me understand.
Five months ago my mortgage was £1050 per month. As
from April onwards I am formerly advised that it will be £550 per month. I am shrewd enough to know that interest rates have fallen; but where has all the money gone, and why were interest rates so high anyway? There is no evidence that high interest rates protected us against inflation (not such a bad thing in any case?) And who got the benefit of the other £500 I paid each month?
Now I know that depositors got alot, but most of bank funding is fron the market in toto......Why should I ever let a government make arbitrary decisions about the rates of interest and the cost of my mortgage? (PS I am grateful for the £500 per month.) Lastly what counselling is to be provided to the finance professionals as rates move up again and who will deal with the boom in repossessions as repayments double?
- Ray Dickins, London, England, 12/02/2009 15:51
Report abuse
The sight of Gordon Brown trying to squirm his way out of the acceptance of any blame or responsibility for the economic mess is revolting in the extreme and it will make matters infitely worse if he takes hasty pre-emptive action on City rewards and bonuses. Given that Government appears unable to do more than look to the good nature of the Banks, the senseless posturing should stop and we should await the outcome of the Walker Report. Gordon Brown is fast becoming the say anything, do anything, achieve nothing man of politics.
- James Elliott, Eastbourne UK, 12/02/2009 15:51
Report abuse
If this is not public rape an pillage, I do not know what is. They have put us all down, screwd up royally and now they are laughing on our face. If this happens in a normal company, the MD will be instantly dismissed, no pay out, no severance pay and nothing more that a cardboard box to put his belongins. But UK Plc is doing what it fancies and showing the two fingers up. Only a Labour government can do that and get away with it.
Isn't time that man went? not that will solve anything, but somebody else, or the rest of us, can at least try
- María, London, 12/02/2009 15:51
Report abuse
Prescott for PM! It's time to re-open the Tower of London for business.
- Bloke, London, 12/02/2009 15:49
Report abuse
One of the ways to avoid the problems of Bonuses is to force the main UK banks to operate as two seperate entities, one retail banking and normal lending and the other Investment banking and risk. Then the staff who are working hard delivering a profit can get a bonus out of that entity and if they make a los they don't. It would also ensure that investors new what risk they were taking with their investment.
It is the investment bankers that are very much to blame. Hive them off and deal with them seperately.
- Bruce Page, London, 12/02/2009 15:48
Report abuse
Well done Calamity Brown, give them my last penny. Don't bother raises the taxes any more though because I'm broke.
- Roger, Surrey, 12/02/2009 15:46
Report abuse
There is a very simple answer to this.
If the bank insists on paying out the bonuses - simply either nationalise them altogether with new contracts as we already own 70%, or just pull back all the money that has been ploughed in and see it go down, then pay the money that is owned by bank customers - cheaper by far.
How come we own so much of the bank but have no clue about what we own? What happened to 'due diligence'?
- John Whitby, Peterborough, Cambs, 12/02/2009 15:33
Report abuse
The Government are between a rock and a hard place. If the bonuses arent paid then key staff will move to banks where they do (non taxpayer owned). If this happens the banks that have tax payers money will be in even greater trouble and will not survive. The greedy pigs there know this and are playing on it. Me personally would pull the plug on these banks and force them to be nationalised before its too late.
- Dc, London, 12/02/2009 15:21
Report abuse
Just take all your money out of RBS - then watch the #hit hit the fan
- Grim Reaper, Hell, 12/02/2009 15:13
Report abuse
With hindsight the government should have let the banks fold and rescind all employee contracts. Without government bailed-out RBS and HBOS wouldn't be around! Barclays can do what whatever they want!
- Max, Isleworth, 12/02/2009 15:13
Report abuse
Just what were all those well educated Bankers thinking,There was a clue in the term Subprime, It seems that the UK banks actually hold more of this stuff than the US ones.
I was a Money Broker in the 70s, and fund manager in the 80's. As a money broker my main clients were Building Socities, who had a very restrictive investment policy, in as much only highest grade investments were to be used, and as a Pension Fund investment manager, the same applied to a very large part of their portfolio, risk was to be avoided, except for less than 10% of their assets. untill quie recently the Rating Agencies were funded by the Investors, but that changed when the Banks became the originators of the new investment packages, and were able to tweist the Agencies arms to pass them through AAA, which also in turn widend the market to include those that could only hold investment grade bonds
- Michael Rudd, Barking UK, 12/02/2009 14:39
Report abuse
It has recently been reported that Gordon Brown had said that some ten years ago he reported to cabinet of his concerns over the uncontrollable situation of UK banking.
Yet today he doesn’t know anything about the workings of the Banks, the FSA, so maybe he didn’t realise he was in charge of the UK’s banking regulation, he was in charge of the rules and he was responsible to ensure its proper workings.
This is the same man that got rid of the UK’s ownership of the world’s largest nuclear energy production capability, then a couple of weeks later realized he needed it so went cap in hand to the French State to be bailed out.
This is the same man that couldn’t see the point of Gold reserves so got rid of the bulk of them at the bottom of the market.
This is the same man whose government has announced today he is to assemble Japanese trains in the UK rather than let the contract go to a UK manufacturer. Leading to further destruction of UK engineering skills and technology base, and is not as it is being spun.
Does Gordon Brown support the UK, or is he just out to destroy it?
- Ian, Reading, England, 12/02/2009 14:38
Report abuse
Up yours Gordon Brown, Britain has had enough!
- Stuart, UK, 12/02/2009 14:37
Report abuse
The charge brought by our politicians, is that the Bankers were driven by greed,So just what drives our leaders in Parliment, yesterday there was a report in the paper that Jacqui Smith had claimed £116,000 allowences for a secon d home whilst living as a lodger in her sisters house, no wonder that they dont wish to allow us the normalpeople to have access to their expences, But thjey of course are driven by higher things,Smith will no doubt say she acted within the rules, this is exactly what could be said by the Bankers.
- Michael Rudd, Barking UK, 12/02/2009 14:21
Report abuse
Well GB has run out of cards to play now - lowering interest rates will have little or no effect to the man in the street, tax receipts are plummeting, a budget scheduled for the 22nd April should be brought forward to now, so that the relief can be given to the public earlier to stimulate the economy. The last comments by nu Labour that green shoots were appearing seem like utter nonsense and I am afraid that that was the last of the upsude on the dead cat bounce of the UK economy. God bless us all.
- Wallytrader, London, 12/02/2009 13:35
Report abuse
So we're now told by "Government sources" that "the rapid deterioration of recent months (will) inevitably lead to a downgrading of the forecast in the Budget this spring". If the forecast can go from a fall in output of 1.5% to (as now forecast by the Bank of England) 4% in only 3 months, what does that tell us all about this Governments competence in forecasting. How can Gordon Brown suggest that he's "doing the right things" to lead us out of the current recession/depression if his forecasting capacity can't even project forward 3 months??
- Malcolm, London, 12/02/2009 12:42
Report abuse
