'Big bonuses? It would be wrong to stop paying them'
Barclays' £50m-a-year boss delivers a defiant rebuff to critics who say bankers are overpaid
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Independent Minds
Bank bosses were adamant yesterday that they would continue to pay seven-figure bonuses to workers, describing them as "essential if we want people to work in our industry".
They also claimed that high-calibre graduates were starting to think twice about working in the financial services industry because of the growing backlash against bankers.
But the comments sparked fury among politicians who said they were "out of step" and renewed calls for City watchdogs to crack down on bankers' pay.
Bob Diamond, the head of Barclays Capital, whose package has topped £50m during the boom, was speaking as Barclays unveiled first-half pre-tax profits of £2.98bn. Mr Diamond, BarCap's president, will net $36m for shares he paid $10m to buy. He admitted that the bank had hired staff on multi-year guaranteed bonuses since November, something the City watchdog has since written to every chief executive to warn them not to do.
But Mr Diamond said it would be wrong for the bank not to pay out "if we had really good performance", and argued that performance-related bonus payments were vital given the bank's "obligation to run a client-first business". He said: "It is pay for performance and it is based on principles we have followed for a while now."
He was backed by his boss, John Varley, Barclays' chief executive, who said: "One of the jobs I have as chief executive is to assemble on behalf of our customers and shareholders the very best team that I can. You have to hire and retain the best people in the industry and there is a market that determines whether you can do that."
He accepted comparisons of his job to that of a Premiership football manager, saying he had "no higher priority" than to ensure Barclays performed strongly and had "the best people".
Mr Diamond said that fewer than 10 per cent of the staff of Barclays Capital were on guaranteed bonuses and "less than a handful" of people had been hired on multi-year guarantees – the most controversial element of the way banks pay stars – since November.
However, the fact that it has been doing so at all will be seen by some as evidence that banks have still not sufficiently reformed themselves and simply "don't get it", following the banking crisis that has rocked the world's economy.
HSBC, Britain's biggest bank, warned that the backlash facing bankers in the wake of the financial crisis was putting off graduates from joining what is still Britain's most important industry. "We clearly see students and graduates thinking twice about financial services and I think we have to be responsible," said the bank's chief executive Michael Geoghegan.
He said HSBC, which made £2.8bn in the first half of the year, did not offer guaranteed bonuses but said banks had to pay to hire the best people.
The comments drew scant sympathy from politicians. Labour MP John McFall, the chairman of the Treasury select committee, said: "The banking industry is out of step with the rest of industry in its compensation arrangements... The public can be forgiven for thinking the banks are making hay while the taxpayer pays."
George Osborne, the Shadow Chancellor, said: "Banks should watch out that they do not misuse taxpayer support – it's designed to facilitate lending, not mega pay deals."
Vince Cable, the Liberal Democrat Treasury spokesman, said: "Without the taxpayer, many bankers would be without a job, let alone a huge bonus. Their greed and excessive risk-taking led to this crisis which is now costing millions their jobs and many their homes." He challenged the Financial Services Authority to "force the banks to publish details of their policies on pay and bonuses and the package details of anyone who earns more than the Prime Minister".
Asked about the prospect of banks paying big bonuses to senior executives, Ian Pearson, the Economic Secretary to the Treasury, said: "We've made it very clear to the banks there can be no return to business as usual.
"We want to see stronger banks, but we also want to see banks that have learned the lessons of the past, and we're determined to see that they do."
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Comments
I think we might just be able to stumble on without them, and we may even avoid another helping of the debacle which all these banking high-flyers were responsible for, something Barclays appear to have very quickly and conveniently forgotten.
Not that I expected anything else from banking bosses, as you wouldn't expect a pig to be happy if you stopped filling its trough. However, comparing bankers with Premiership footballers is most apt, given that football has also lost all sense of morality (if you doubt the latter, contrast Bobby Robson with any of today's greed-driven pygmies).
Bank CEOs complain that very able young people aren't keen to seek employment in the financial services industry, but doesn't it penetrate the skulls of the former that they are replicating the very behaviour which is discouraging many of the best graduates?
Desmond tutu perhaps? Social workers? Nurses? Firemen? Careworkers? all the volunteers and low paid people who run the various charities that try and fill in the cracks of care in society? scientists perhaps?
Surely they must mean people who are able to forgo personal reward for the sake of doing what is good, just and right.
Or do they mean people who are able to turn a profit at our expense?
I can just imagine our noble bankers saying:
"I wanted to do something for the poor, they unfortunates, so I entered into a system that ensures that there would be plenty of poor and downtrodden for me to help, a system that rewards the rich so we have something to give the poor and tax benefits so when we give, we receive. A system where it's cheaper by the dozen and I buy by the score. A system that would allow my wealth to trickle down to the next level which is where my yacht and sports cars are. A system where I can make my own money out of thin air to loan to you and you can't because the economy depends on you being in debt to me."
That's right: all the kinds of people the global 'paradise' spits on!
As one neocon put it:
'In an interview, the economist James M. Buchanan decries the notion of the "public interest", asking what it is and suggesting that it consists purely of the self-interest of the governing bureaucrats. Buchanan also proposes that organisations should employ managers who are motivated only by money. He describes those who are motivated by other factors—such as job satisfaction or a sense of public duty—as "zealots".'
http://en.wikipedia.org/wiki/The_Tr
This dystopic view of human nature has now taken over, and is covertly supported by a Prime Minister who is totally in hoc to greed.
Banks must be made to declare on their forms, what is paid in bonuses to staff, so that the public can monitor the efficient use of their own money--and maybe choose a different bank.
In a depressed market, it is fatuous to say bonuses must be offered to attract people into banking. PROOF IS, that you do not get the best people anyway, but the most vicious form of being, who is probably related to others within the business.
One thing is for sure: we cannot beieve a word bankers or politicians say.
Remember, the reason the 2008 financial disaster happened was that bankers were too clever by half.
The powerless chancellor hands over OUR money to the banks which they take without even a "thank you" and then proceed to do as they did prior to almost going bust.
The only thing they did was to hang their heads and say sorry.
now everything is alright now then?
Don`t we have some system called taxation? If I get any yearly bonus I have to pay tax on it so why cannot our chancellor impose around 75% tax on all bonuses over £100K. Furthermore when these monies are eventually repaid will ther be any interest added to the loans as we Joe Public have to pay if we borrow money from these thieves?
Or is he scared that if he does do the bankers would leave the country to find better jobs?
Last night on the news one banker said that footballers are paid £150K a week so why not them? At least footballers are seen to entertain the public while the bankers do it behind closed doors
If you do your job well, that is why you were hired in the first place.
When did you last hear about a teacher getting a bonus when enough of their pupils got high grades.
When did you last hear of a tractor driver who got a bonus because he ploughed straight furrows.
When did you last hear of a nurse who got a bonus for being kind to a sick patient.
Maybe that patient was a banker!
The system stinks, bankers stink, & when can we have our money back?
You make a profit; give it back now!
I must myself get one of those woolly aprons.
So I suppose we should be grateful that they're prepared to waste bonus-stashing time making any public statements of their position.
Ah, but wait a minute. They must have been PAID for the interviews. Like the morbidly obese, or the mythical dragon in his gold-packed lair, they probably just couldn't resist the proffering of yet more goodies.
But isn't the point that this system was what brought the other banks to the point of collapse? Is the tax-payer just to accept that this is the way things are, and stand ready for another bail-out next time, when the beggar may perhaps be Barclays?
This is a sick sick joke being played on the taxpayers there is no way you can read what happened without believing a taxpayers got the shaft.
Wealth has been redistributed, the taxpayer, just gave all their money to the rich, so they can stay rich because somehow that benefits us.
Not even Monty python could come up with such a play.
A govt with balls would say- if any banker is paid a silly bonus (and hundreds of thousands is a silly bonus) then it will call all its loans and debts in on all banks. And if it has stock instead it will dump in on to the market and kill their share price. And if as a result a couple of banks go under we do not care. We do not believe their stories of the ensuing disaster - they are lying. Lehman brothers went to the wall and nobody died.
These greedy pigs have to be forced. Laws, rules, investigations. Or jail for theft which is what unwarranted bonuses are.
Northern Rock: Former Bidder's Cash Warning
A top businessman who tried to buy Northern Rock has told Sky News that taxpayers face a "long wait" before they see a return from the nationalised bank. Luqman Arnold, a former boss of Abbey, was a serious bidder for the bank before it was taken into state ownership in February 2008.
Speaking on Jeff Randall Live he said that the company is now worth a lot less than it was in 2008.
"A year ago the brand had value... when the decision was taken that all the money would go to repaying the Government, you under-invested in the bank, you under-invested in the business.
"I think that makes it more difficult to resuscitate.
"The taxpayer certainly owns the rubbish, but maybe by selling the good stuff they get some money back on that, but the challenge is to resuscitate a bank which has obviously been through a very strange year."
His comments came after the bank announced a loss of £724m for the first six months of 2009 as its bad debts tripled.
The senior partner of Deloitte, one of Britain's so-called "Big Four" accountancy firms and the auditor of Royal Bank of Scotland, has collected an annual pay package worth £5.2m.
IN THE USA
General Electric will pay a $50 million (29.6 million pound) civil penalty to settle charges by the U.S. Securities and Exchange Commission that it misled investors with some fraudulent accounting in 2002 and 2003.
The SEC found that the largest U.S. conglomerate had intentionally wrongly accounted for some commercial paper hedging activity and the sales of railroad locomotives, in an effort to make its financial results look better.
The world's largest maker of jet engines and electricity-producing turbines said on Tuesday it did not admit or deny wrongdoing as part of the settlement.
"GE bent the accounting rules beyond the breaking point," said Robert Khuzami, director of the SEC's Division of Enforcement. "Overly aggressive accounting can distort a company's true financial condition and mislead investors."
In Vietnam we host they came we shot they came we shot they came we shot they came our gund were empty we left we left WE LEFT better live and let live YOU Only Live once.
I thank you
Firozali A Mulla