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Full details of the pay and bonuses of thousands of high-earning bankers will be made public.
A sweeping review of the banking sector calls for more transparency into the pay of the biggest deal-makers.
Its author, Sir David Walker, believes that if the public and shareholders can see how banks operate, the excessive pay and risk-taking which caused the credit crunch will be curbed. Only board members including chairmen and chief executives currently have their remuneration disclosed but hundreds, if not thousands, in the Square Mile and Canary Wharf earn far more than their directors.
The rules will apply to all banks with London offices, meaning the earnings of traders at Goldman Sachs, who have an estimated £14 billion pay and bonus pot this year, will be made public.
Sir David, who is heading the Government's review of corporate governance in banking, will not “name and shame” the trader, proposing instead that their pay, bonuses and pensions be listed in bands. But City figures today said the publication would start “guessing games” on every trading floor — and some identities would be flushed out.
Among those believed to rake in vast sums below the radar is Roger Jenkins of Barclays. The super-banker, known as the King of the Double Dip for his ability to devise ways in which the wealthy can get tax relief twice, is thought to earn £40 million a year.
Sir David, the former chairman of Morgan Stanley and ex-Bank of England director, called for the clampdown “against a background of defective control and serious excess” which fuelled the financial crisis.
Sir David's review also ties bonus payments to long-term performance rather than short-term risk.
Goldman Sachs this week revealed it is likely to pay its 5,500 London staff an average of £500,000 each this year. Other banks such as Barclays are also expected to hand out lavish rewards. It emerged today that thousands of London bankers at JPMorgan were also in line for record pay and bonuses, averaging £282,000 a head.
Royal Bank of Scotland, which has received billions of pounds of taxpayer support and is 70 per cent owned by the state, is offering packages to lure or retain staff that are at or above the industry's pay peak of 2007.
The City watchdog, the Financial Services Authority, is also drawing up plans to curb excessive pay and risk-taking.
Sir David said: “Bonus schemes contributed to excessive risk-taking by rewarding short-term performance. These recommendations should bring substantial improvement in the governance of banks. They will not guarantee that failure will be avoided in future but will greatly mitigate the risk.”
Vince Cable, Lib-Dem Treasury spokesman, said: “Transparency has done wonders by opening the lid on Pandora's Box in Westminster; it is high time that the City was subject to the same level of scrutiny.”
Reader views (24)
what a ridiculously emotive stock photo to have used - talk about biased journalism. Why not a photo of bankers eating third world babies in a big pool of caviar ? What about all the tax these people pay ? oh and Robert Webb you really need to take reality check.
- Squiz, Islington, 17/07/2009 08:54
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This is merely a 21st Century witch hunt (i.e. this lot are highly paid, ergo they are evil and must be eliminated). Our City professionals work ultra long hours under stressfull conditions, their pay and employment is dependant on their performance. Many are highly educated and highly experienced with complex business skills that other financial centres would love to have. I say lets encourage high bonuses and pay, but link it to appropriate performance targets that do not necessarily encourage short term opportunism by individuals.
- Andrew Skelton, London, UK, 16/07/2009 17:13
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"Publishing their salaries will surely be against their Human Rights won't it!!!!! Another Labour cock-up???"
- Malcolm, London
WHAT?!?
- Mike, London, 16/07/2009 16:56
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I think James is right here. Disclosure wont work as the banks will side step as they have already done in some areas by upping basic and reducing bonus, thus appearing to be goody two shoes listening to public opinion. We as banking staff like that very much as then it isnt performance related.
But before we all get the socialist knife out here - as apparently no banker has ever served in the military (GET A GRIP LOTS OF US ARE EX OR CURRENT VIA TA) I work a minimum 10 hour day plus commute of close to four hours and its taken me 20 years to get to my level.
When I worked for GS they expected a vast amount and they pay well IF you perform. There are also no illusions - if the business dries up - its goodbye. I get fed up with people telling me what a waste we are when I have been made redundant twice in two years, yet still paid £50k in tax last year and have not claimed one day job seekers allowance in 20 years! Ask a civil servant how easy it is to get a bad worked sacked - in some cases nigh on impossible and look at the pensions they are getting!
Who's better for society?
- Mark, Winchester, Hants, 16/07/2009 16:28
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the vast majority of the private sector pay a large number of their staff bonuses based on sales and profitibility performance. This is standard process of a Capitalist Society and designed to motivate behaviour and retain the best staff - who typically will bring in 80+% of the profit. The difference with GS and other banks is that they deal in bigger numbers and have some really clever people....
we all play by the same rules many of them are just better at the game......of course I am jeolous but maybe if I had worked harder and got that PhD, I could have been that superstar quant writing those trading models generating millions....
- Martin_Clerkenwell, london, 16/07/2009 16:11
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Oh, OK, The City of London, going by the headline I thought you were talking about Manchester City!
- Steve, London, UK., 16/07/2009 16:05
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Guess what all employees will suddenly work for the Lichtenstein subsidairy with nominal pay from the London branch...bingo disclosure will be neatly sidestepped... meaningless gesture politics at its worst.
- James Macleod Ritchie, Oyster Bay Cove, 16/07/2009 15:42
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EDITED by admin @ 9.15 on July 17 2009
This comment breached community guidelines
- anon, anon, 16/07/2009 15:18
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Goldman Sachs hasn't been bailed out by the Government. It's an entity in the private sector and, if it chooses to pay bonuses (for which the recipients are taxed),based on profitability, then so be it. The shareholders can always vote against it, if they are dissatisfied. What's the difference between this and a dividend paid to shareholders of a company from generated/accumulated profit? Or am I missing something? I don't think it's the bonuses that have fuelled the crisis, rather "fresh-air" lending and borrowing!
- Victoria, London, England, 16/07/2009 15:06
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i think everyone is getting very bitter here and carried away... my friend works for goldmans and he works all the hours he can find, including weekends and 12 - 14 hours a day, he hardly got a bonus last year and i think he deserves way more than 500k per year for his skill set, determination and hard work. i'd like to also point out his bank were not bailed out by the government either so nobody has the right to give them back lash. in my opinion they deserve it.
- Sam, london, 16/07/2009 15:03
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Banks created money, the Gov paid interest on this make believe dosh which legitimised their wealth creation enterpises. Then reap what is sown...
- Discuss -
- William, Hay~Heath UK, 16/07/2009 14:51
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I dont know where you get your figures from but an average of £500,00 for GS employees is pie in the sky - Your average analyst will get 60% of a £40k salary in a good year, a VP about 60% of a £100k salary, a very senior VP 200% of a £250k salary and so on. The majority of this mega bonus would be the top 5% only - the remainder will get much less than this - I would like to see the % displayed on who gets what by employee type - then you would see teh reality - you are way off here.
- Mark, Winchester, Hants, 16/07/2009 14:02
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Don`t tar ALL bank employees as high earners with huge bonuses, Most are clerks who are the first to be made redundant in tough times.
- Rob, London, 16/07/2009 13:46
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Publishing their salaries will surely be against their Human Rights won't it!!!!! Another Labour cock-up???
- Malcolm, London, 16/07/2009 13:44
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Good for their wives' divorce lawyers too !
- Madmax, London, UK, 16/07/2009 13:40
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It's happening all over again.
A bank gets lucky in its investment and it hands out the winnings as bonuses.
If next time it gets less lucky with its picks, it will turn to the public purse for protection.
Its really a shambles. Please, Mr Brown, stop this now.
- Ant, egham, 16/07/2009 13:31
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I agree with Walter... something seriously wrong where people earn sums of money on such a large scale. Wasn't there a story in the media recently where these bonus's were going to be taxed at 90%.
A free market does spread the wealth but at what cost? Perhaps blowing up the secrecy about pay will make a difference. But can you tame such a beast, or will it do as it pleases? Will the rich and the poor ever meet?!
- Questions?, London, 16/07/2009 13:24
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Government risk underestimating taxpayers determination to see true reform of the financial services sector. Not sure any where if they make large profits, but everyone cares that when they use our money to do it and then bail them out if it goes wrong. We are not putting ourselves in this position again and Govt reforms need to reflect this or taxpayers need to actually consider some form of revolution to ensure necessary change occurs - it is this serious as the alternative is permanent bankruptcy for us all in the next crisis.
- Jim, London, 16/07/2009 12:27
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I think regulation to curb the risk culture is welcome but let's not turn into green eyed monsters because someone earns more than us or we might as well all move to Cuba.
Speaking of moving, if you were one of these mega-earning bankers and you had the choice between working in nanny-state London or somewhere without such disclosure laws, you would likely move to the latter and enjoy the wonga.
Let's not shut down the Square Mile over this - as much as the bankers may not deserve the wads of cash, the banking sector also employs a multitude of other 'normal people'.
- Penny Pincher, London, 16/07/2009 11:55
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This class of people are scum -- I know, I've worked with them. They don't earn these bonuses, they get paid them, and that's a huge difference. As we now know they don't actually make any real profits, it's all smoke and mirrors. It's a total myth that these banks are the engine of the economy. There will be no change in the city because no government has the guts to take control -- even of the banks which they (sorry, 'we') own.
- Philip, London, England, 16/07/2009 11:32
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We all know that parasites in the City in banks and hedge funds are making obscene amounts of money; what we need is a change in this arrogant self-seeking culture.
- Richard Kennard, Welling, 16/07/2009 10:53
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No problem with this - what is there to hide? Given the obvious link between the destruction of the economy and the misery caused, highlighting the earnings of those in the driving seat should be interesting.
Average of £500k! Something HAS to be wrong there. I'm a capitalist, but that's just strange.
- Walter, London, UK, 16/07/2009 10:40
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A complete gimmick ! If shareholders approve these renumeration packages, then what is the point of publicising ? Create gangs of vigilantes perhaps who will target those they deem as overpaid perhaps ?
Perhaps the law should focus more on shareholder responsibility, as they are the owners of these corporations, so that they demand as a matter of course details of what their Boards of Directors are doing with their money ?
Perish the thought that shareholders should continue to think that they need do nothing as the taxpayer will always be there to bail them out because they abnegated their responsibilites and as a result, lost everything !
- John, Twickenham, 16/07/2009 10:37
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Publication of these vast, and undeserved, salaries and bonuses will not stop them being paid! We have Hester, new man at our bank (RBS is 70% owned by you and me as taxpayers) who is to get around £10 000 000. We all know the figures but it didn't stop our spineless government simply agreeing to this obscene pay. The usual excuse was wheeled out once again....'we have to pay top wack because otherwise he would've gone elsewhere'. This is a complete lie and shows once again that this spineless government takes us all for fools. Look at the size of the trough the Goldmans pigs are to drink from and realise once again that public knowledge is not an effective means of curbing these money driven self servers. What we acutally need, which would bring in a sizeable chunk of cash to the taxpayer AND would help slow the massive rise in pay, is a more progressive tax system that would take the form of a high tax for those bonus pots that these bankers enjoy. Until we get a government that isn't actually sponsored by the city (only that doesn't exist in the UK) we will see this 'business as usual' continue and will have to look forward to the next mess these bankers cause. Noone has been truely held to account for what has taken place these last few years and thus there is no disincentive in place to make sure it doesn't happen again.
When my 10 month old son asks me in 20 years time why the NHS and free education no longer exist I'll point him in the direction of the bankers!
- Bobby Smith, london, 16/07/2009 10:22
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