Bankers Bonus Cap.

Further to above, I disagree with the government on this 200% cap.

I don't think it is fair for the following reasons...

People seem to generalise and think if the bank performs badly then no one should get a 200% bonus without realising there are literally hundreds of divisions.

If Banker A in one division makes £10,000,000 for the firm but Banker B in another division loses double that amount - then surely Banker A should still get a bonus for his performance despite Banker B destroying the overall performance of the bank.

It is this thinking that because some bankers brought down the performance of the bank that even the really good performers of the bank should not be rewarded which will cause RBS' recovery to take even longer.

Even if the 200% bonuses were paid to the top performers, the total compensation package is still 33% behind other banks and now that is even more.

It's not acceptable that the government can dictate the pay of even the top performers at the bank (those driving the recovery), as we've already seen, they will jump to other banks. And it's no wonder they have a recruitment issue with even junior bankers when they get slated like this.

Also some divisions carry more risk than others. It's not right that bankers working in relatively risk free divisions who make money should get slated with the guys who work in riskier divisions and lose money.

It's a decision that is purely political and has no grounding in any economic sense or reality at all.

In my opinion, other companies should adopt the incentive models of banks - where the employees get a share of the profits they generate. Even at top banks, cleaners have part of their compensation allocated to overall performance of the institution.

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Monetary incentives.. that's the primary reason people work. Not everyone wants to willingly help people who are suffering from mental illness.

This government is asking for a collapse in our financial sector.. what next? Nationalisation of banking industry? The best bankers would simply move abroad. What then?

In the five years before Lehman Brothers collapsed, the CEO took home about $350 million. If you think other companies should adopt an incentive method whereby if you run your company into the ground and play a major role in causing a global recession you get hundreds of millions of pounds then I hope your never in charge of a company.

Getting insane amounts of money regardless of performance is not incentive based pay.

In the five years before Lehman Brothers collapsed, the CEO took home about $350 million. If you think other companies should adopt an incentive method whereby if you run your company into the ground and play a major role in causing a global recession you get hundreds of millions of pounds then I hope your never in charge of a company.

Getting insane amounts of money regardless of performance is not incentive based pay.

If you read what I said, I stated 'employees should get a share of the profits' which is exactly what banks do.

At Lehman Bros, that was exactly what happened, but it was based on short-term added value.

Today banker compensation is mostly made up of deferred shares, especially for seniors, so they have an incentive to add value over the long-term and that is exactly how it should be for any company.

However, that is what we have in place at the moment, there is no reason to add a bonus cap on top.

At RBS, for example, for both juniors and seniors only £2,000 cash makes up the overall bonus with the rest in deferred long-term compensation.

If anything, the bonus cap has just ensured there is a lack of incentives in the long-term performance of the bank with zero loyalty amongst their bankers which was why I also said the decision was purely political.

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So basically, what you're saying is that. Lot if people
Misunderstand Bankers Bonuses?

Yet doctors get a fraction of that for saving lives.

Doctors save lives. Bankers keep the system running, I think I know which is more important.

Doctors. If the banks pumped the money into the economy maybe we'd be in a better state.


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Doctors. If the banks pumped the money into the economy maybe we'd be in a better state.


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But without the bankers the doctors wouldn't be in a job.
And pumping money into the economy causes inflation, it doesn't necessarily fix the economy.

After Clegg denied RBS the permission to increase bonuses to base + 200%, it got thinking that it was very unfair. Why should premier league footballers be allowed to get paid extortionate amounts of income (£300k/week) + rising? Whereas hard-working people such as bankers who have to work excessive hours have to suffer a pay cut.

The free-market justifies bankers huge bonuses similarly to how it justifies footballers wages. So isn't it discrimination against the Banking industry? What are your opinions on bonuses for bankers being capped?

I'd urge you to take an objective approach.

I've got news for you pal, the very fact that the government seems to take a similar perspective to you and 'don't give a flying ****' about recruitment and retention in crucial public services is part of the reason the NHS is bleeding talent at a rate not seen since the 80's. Me and plenty of my colleagues are planning on leaving, or have already left the NHS, taking our services to the private sector. The NHS has lost so many A&E consultants that half the staff working in such a specialty in Victoria, Australia trained in the UK or Ireland. The NHS is recruiting nurses from the Phillipines in droves again, and many Psychologists, SALTs and Physiotherapists I know are now working in the private sector, leaving inexperienced, burnt out clinicians to try and hold what's left of NHS community services together.

The fact that these bonuses directly contributed toward the high risk culture that led to the crash of the economy highlights how the 'market' has become broken in banking, and how it isn't considered enough when recruiting and retaining professionals in the public sector. People in the NHS, civil service and other public bodies can take their skills elsewhere; it is a market economy and if you don't respect them enough, they leave. That's the 'real world'.

If you read what I said, I stated 'employees should get a share of the profits' which is exactly what banks do.

At Lehman Bros, that was exactly what happened, but it was based on short-term added value.

Today banker compensation is mostly made up of deferred shares, especially for seniors, so they have an incentive to add value over the long-term and that is exactly how it should be for any company.

However, that is what we have in place at the moment, there is no reason to add a bonus cap on top.

At RBS, for example, for both juniors and seniors only £2,000 cash makes up the overall bonus with the rest in deferred long-term compensation.

If anything, the bonus cap has just ensured there is a lack of incentives in the long-term performance of the bank with zero loyalty amongst their bankers which was why I also said the decision was purely political.

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After Clegg denied RBS the permission to increase bonuses to base + 200%, it got thinking that it was very unfair. Why should premier league footballers be allowed to get paid extortionate amounts of income (£300k/week) + rising? Whereas hard-working people such as bankers who have to work excessive hours have to suffer a pay cut.

The free-market justifies bankers huge bonuses similarly to how it justifies footballers wages. So isn't it discrimination against the Banking industry? What are your opinions on bonuses for bankers being capped?

I'd urge you to take an objective approach.

No because we don't have to give money to the football clubs if we don't want to. But you try not giving money to the banks, you can't get a job or rent a house without a bank account, let alone get a mortgage or anything else required to function in our society. That's not even mentioning the fact that taxpayers' money is used to bail them out and people's money is being devalued all the time by quantitative easing.

Doctors existed before banks even existed so that isn't true.

But today in the modern era it is true, how do you think the NHS finances itself and restructures debt? How do you think it manages capital/cash flow in an effective way etc...

Oh yeah, investment banks do that.

However, what IBs can't do is save the NHS from the truly atrocious management.

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Incidentally, is "add value" just Newspeak for "make profits"? I've heard this phrase a lot lately among spivvy types and haven't quite been able to pin it down

RBS is an example, the government didn't bail out all banks. There is a government initiative to cap bonuses for bankers whereas other industries (Such as Football) are not being targeted.

Doctors are hired by the public sector They have monopsony power and decide doctors wage rates, regardless of what the free-market equilibrium would suggest.