"Bankers celebrate bonuses like the financial crisis never happened" Watch

MagicNMedicine
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#81
Report 8 years ago
#81
(Original post by Lrampant)
It's incredible how someone who can put together a well written post can lack proper understanding of the banking system. Let me spell out the key mistake that everyone seems to make;

The people that make the large bonuses are not the people lending money to businesses.

It's remarkable just how many people cannot grasp this concept. The people sat in the Investment Banking arms of Barclays or RBS or HSBC, etc., have no say on lending money to small, medium or even large businesses. The exception is when a large client is loaned money for goodwill purposes to improve the relationship and enhance the possibilities of doing future M&A, IPO, etc., type deals. This lending normally always occurs at a loss.

As perverse as it sounds, Investment Banks very rarely make investments into business. Their job is to source finance, not provide it. Exceptions do of course exist.
You have hit it in one - the "investment banking arms of...." and then you mentioned three banks that provide retail banking services and do support the type of small and medium businesses. I know investment banking does not finance small business, but the activities of investment bankers involve using the deposits of the retail part of the bank.

But then I do support breaking the banks up into separate organisations and this would stop the argument about bonuses. If the public's deposits are not at risk due to the activities of investment bankers then the government doesn't need to underwrite them, then the banks who make bad investments will go to the wall like any other business and the ones who do well will be able to pay out whatever bonuses they like.
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AI99
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#82
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#82
There can be arguements for both sides. But I don't think theres anything wrong with bonuses. Banks generate alot of profit and like to reward their staff in proportion to that, even if the work itself might not merit 600k or millions. But it's how it works e.g top premiership footballers make 150-200k a week and only play once a week, but the owners don't say were not going to pay you that much because all you done is kick a ball about for 90 mins, they pay them these high salaries in proportion to how much money they are making the team.
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mxp804
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#83
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#83
Don't know if this has been said before, but £200 for a bottle of champagne?! ****ing peanuts.
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Lrampant
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#84
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#84
(Original post by MagicNMedicine)
You have hit it in one - the "investment banking arms of...." and then you mentioned three banks that provide retail banking services and do support the type of small and medium businesses. I know investment banking does not finance small business, but the activities of investment bankers involve using the deposits of the retail part of the bank.

But then I do support breaking the banks up into separate organisations and this would stop the argument about bonuses. If the public's deposits are not at risk due to the activities of investment bankers then the government doesn't need to underwrite them, then the banks who make bad investments will go to the wall like any other business and the ones who do well will be able to pay out whatever bonuses they like.
I've highlighted the important part in bold. This simply isn't the case to any measurable degree. The absolute vast majority of investment banking is either advisory or client based execution. Banks barely trade on their own books. Don't get me wrong though bulge bracket banks do use their balance sheets in some deals but the whole "casino banking" concept couldn't be further from the truth.
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MagicNMedicine
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#85
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#85
(Original post by Lrampant)
I've highlighted the important part in bold. This simply isn't the case to any measurable degree. The absolute vast majority of investment banking is either advisory or client based execution. Banks barely trade on their own books. Don't get me wrong though bulge bracket banks do use their balance sheets in some deals but the whole "casino banking" concept couldn't be further from the truth.
So why did the government need to step in to secure retail deposits. Who had put retail deposits at risk?
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Troyes
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#86
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#86
Nice discussion. Just want to add that although banks like Barclays were not bailed out by the government, by paying their employees obscene bonuses they are significantly raising the market value of these employees and in turn the salaries that the nationalised banks like RBS have to pay to attract talent. So even though Barclays were not directly bailed out, their actions do indirectly have an effect on the taxpayer.
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acies
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#87
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#87
(Original post by Troyes)
Nice discussion. Just want to add that although banks like Barclays were not bailed out by the government, by paying their employees obscene bonuses they are significantly raising the market value of these employees and in turn the salaries that the nationalised banks like RBS have to pay to attract talent. So even though Barclays were not directly bailed out, their actions do indirectly have an effect on the taxpayer.
I get where you are going, but please dont tell me you actually think that this is wrong in any way, shape or form.
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Oh I Really Don't Care
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#88
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#88
U jelly?

Yeah, u jelly.
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Imperial Blitz
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#89
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#89
Anyone know how I can be a trader ?
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Troyes
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#90
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#90
(Original post by acies)
I get where you are going, but please dont tell me you actually think that this is wrong in any way, shape or form.
Not saying its right or wrong, just saying it does have an effect on you and me in the end.
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Lrampant
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#91
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#91
(Original post by MagicNMedicine)
So why did the government need to step in to secure retail deposits. Who had put retail deposits at risk?
The point is retail deposits are not used in Investment Banking loan structures. The money you deposit at Barclays on the high street becomes a fractional portion of someone else's mortgage, car loan etc., BarCap don't start lending it to IBM...
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Datbreh
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#92
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#92
(Original post by arabcnesbit)
What about the £300,000 of that bonus that goes straight to the tax man. Is this not mentioned?

What about the 20% VAT they will pay on everything substantial they buy, is this not mentioned?

What about the fact that these guys regularly do 100 hour weeks, is this lazy?

What about the fact that these people worked hard at school, worked hard at University, work hard at their current jobs and if they didn't make their bank any money they would be sacked asap. Is this mentioned?

What about the fact that if you think you get something for nothing in this world you are extremely dumb.

End of rant.
Excellent.
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WokSz
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#93
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#93
(Original post by bognor-regis)
These bankers make me so angry. £200 on a bottle of champagne? £600,000 for sitting behind a desk and wearing fancy suits. It's a complete sham, it really is.

Edit: Hmm neg rep for giving a legitimate opinion. How unlike tsr. Some people need to learn how to have a discussion.
Yet another pleb. You should be beaten, fool.
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