Bank bonuses 'to run to billions in 2011'

[TriWooOx]

Quote:The government is resigned to UK banks paying out billions of pounds in bonuses this year, despite its calls to curb the payments, the BBC has learned.

The best the coalition can hope for is a declaration from the banks that they will pay out less than they would have without government intervention, said BBC business editor Robert Peston.

The government is also looking for banks to lend more to small businesses.

Business Secretary Vince Cable has been vocal in his opposition to big bonuses.

He told the BBC last month that the coalition government was "fully signed up" to "robust action" in curbing bonuses.
Bonus rules

There are also questions about any declaration by the banks that they will make at least some concessions.

One senior banker told our correspondent there "could be more spin than substance" in any commitments the banks make to reduce bonuses.

Royal Bank of Scotland may pay nearer £1bn in bonuses than last year's £1.3bn, while Barclays may pay less that the £5bn-£6bn in total remuneration that its results from the first nine months of last year suggest are due to its investment bankers, our correspondent said.

But even if bonuses are cut, salaries have risen significantly to compensate, by up to 40% in some cases, he added.

Banks have already begun re-balancing pay packages following new Europe-wide rules on bonuses agreed last summer and confirmed last month.

These include introducing independent remuneration committees and setting maximum levels of bonus payments as a percentage of basic salary.

They also include deferring between 40% and 60% of bonuses for between three and five years, paying half of them in shares rather than cash and excluding any rewards for failure.

These particular rules are designed to curb the kind of short-term risk- taking by bankers that some observers argue contributed to the financial crisis.

In the UK, some of these rules will only apply to the big banks - smaller firms, including some banks as well as hedge funds and asset managers, will be exempt.

UK banks have long resisted the further reductions in bonus payments that the government has called for.

The government has pumped billions of pounds into the banking sector, and has bailed out both Royal Bank of Scotland and Lloyds Banking Group.

As a result, many have argued that it should have a greater say in how much banks pay out in bonuses.

However, the banks argue that they cannot dramatically reduce bonuses without the risk of losing top staff to banks based overseas, which are under less pressure to cut the payments.

Allowing some bonuses to be paid was a sensible solution, said London-based headhunter John Purcell.

He told the BBC that the biggest problem for banks such as RBS was attracting and holding on to staff needed to help its recovery - something that would be even more difficult if it could not pay some bonuses.

"As UK taxpayers, we have a stake in RBS and we want it to succeed," he said, adding there were "bucketloads" of firms where bankers could choose to work if they were not offered an attractive enough deal.

"It might be politically uncomfortable and possibly socially disturbing, but it's realistic economics and I think we've just got to suck it up. That's the way it is."

Mr Purcell added that the efforts of Stephen Hester to save RBS "should be applauded, not lambasted by politicians looking for a cheap shot".
Increased lending

As a concession to bonuses, the government wants the banks to commit to lending more to small businesses, which is seen as key to boosting the economic recovery.

The banks have been criticised for not lending more to help businesses throughout the downturn.

For their part, the banks argue that the demand for lending has dropped off, as businesses look to consolidate rather than invest.

They also say they are under pressure from the government to hold more cash in reserve to protect themselves better against any future financial crises.

Our business editor said he would be "staggered" if the banks did not come up with promises of new finance for smaller firms.

"If they failed to do so, the political pressure on ministers to punish them - perhaps through the implementation of a new tax - might become impossible to resist," he said.

http://www.bbc.co.uk/news/business-12131092

[rsol]

they wont really stop untill someone puts a few to the guillotine.....

Quote:"excluding any rewards for failure."

man I want to work for a bank. do they give bonuses just for showing up??????

Quote:"However, the banks argue that they cannot dramatically reduce bonuses without the risk of losing top staff to banks based overseas, which are under less pressure to cut the payments."

fuck them. im sure there are hundreds out there that would do an equally useless job for half the money.

[NathanFleming]

I disagree with this. The given article spreading fake news.