01-24-2010, 03:47 PM
Direct Action Resistance Fighter
Joined: Aug 2006
Fears of public outcry as UK banks prepare to announce £25bn profits
Quote:Barclays, HSBC and Standard Chartered, three of the Big Five UK banks, are planning to radically alter their bonus pools in an attempt to head off political attacks of the type seen in America. Last week President Barack Obama said he was "up for a fight" with the banks including Goldman Sachs and JP Morgan and announced plans to break apart the sector in the US.
Senior Government sources in the UK said that although they did not agree with the President's approach they were expecting to see far less money paid in bonuses when the banks announce their end of year figures over the next month.
The sources signalled that the percentage of revenues put in the remuneration pot should see a sharp fall compared to previous years.
The profits announcements will include a record full year pre-tax profit of around £10.6bn for Barclays when it reports on February 16 according to analysts' estimates.
In the next few weeks the banks are expected to say the size of bonuses being paid out to executives will be reduced compared to previous years – in line with Wall Street banks which have already committed to reducing the ratio of bonuses to total revenues in a bid to stem a tide of increased frustration over bankers' bonuses.
Last night City minister Lord Myners told The Sunday Telegraph: "In a show of restraint, those investment banks that have reported have reduced the size of their compensation pool as a proportion of revenues. Historically, banks paid out half their revenues in pay and bonuses. JP Morgan for the last year reduced that to 33pc and Goldman Sachs to 32pc."
Lord Myners added: "Their decisions will influence those made by British banks."
Lord Myners is to meet G7 finance ministers in London tomorrow to discuss a global insurance levy of banking transactions to protect the taxpayer from bailout threats.
"We will be discussing two issues: contingent capital and levies," he said. "We saw Obama announce a levy last week but that was very specific to recovering the cost of TARP [the American taxpayer support system].
"There is a general discussion about how we might charge a premium to cover the implicit state guarantee. It can be argued that banks benefit from an implict guarantee for which no premium is paid to the taxpayer."
According to a source close to Barclays, it will look to reduce the bonus pool of its investment bank Barclays Capital which was 82pc of net income last year and 47pc the previous year. This year the figure will be well below both percentages.
The source said that the bonus pool was disproportionately high in 2008 because of the cost of assimilating thousands of former staff of Lehman Brothers which it acquired after the US investment bank collapsed.
Barclays' 11-member executive team is expected to defer 100pc of bonus payments for up to three years while the next 2,000 staff are expected to defer 75pc of their bonuses for three years.
A spokesman for HSBC, which analysts expect to deliver pre-tax profits of up to $16.5bn (£10.42bn) on March 1 (compared with a record $24bn in 2007), said "no decisions had been taken yet" on the size of the bank's bonus pool.
He said that HSBC was different from other global banks in that it pays out more in dividends than it pays in bonuses.
A spokesman for Standard Chartered, which is expected to reveal pre-tax profits of around $5.3bn, from $4.5bn last year, said: "We didn't disclose [the size of the bonus pool] last year and we're not going to disclose it this year."
He added that the bank produced 90pc of its profits in Asia.
A Royal Bank of Scotland spokesman declined to say what the size of the bonus pool will be when the bank, which is 84pc-owned by the taxpayer, reveals adjusted losses thought to be as much as £6bn this year.
She said: "No decisions had yet been made about the value of any bonus pool for 2009," but added that it was likely to be in the region of £1bn-1.5bn.
A spokesman for Lloyds Banking Group, which analysts expect to reveal an adjusted loss of up to £2bn, said the bonus pool was very small at the bank.
The revolution is not an apple that falls when it is ripe. You have to make it fall. - Che Guevara
Resistance Films Youtube Channel
User(s) browsing this thread: 1 Guest(s)