Liz Truss Plans To Remove The Uk Banker Bonus Cap

[Hymie]

https://www.bbc.co.uk/news/uk-politics-62968072

If I were an investment banker with a very good bonus pay out (depending on how my investments performed), I might identify a risky investment - if it comes off I’d make well in excess of £1 million as a bonus payment. If it fails, the bank might go bankrupt and I’d miss out on a multimillion pound bonus.

As an investment banker, would you make such a risky investment that might make you a multi-millionaire, but on the downside could bankrupt the bank?

[ToraToraTora]

Your perception of how bonuses are allocated is wrong.

[ToraToraTora]

I get a bonus every year, I don't do any banking.

[ToraToraTora]

Hymie's gone quiet, maybe the penny has dropped!

[Paigntonian]

Banks are private companies, for the most part. Don't even see how it can be legal for a British government to tell them what to pay their employees.

[Atheist]

The British government tells all sorts of private organisations what they can and can't do. It's called making laws.

[Paigntonian]

Athiest: Could you give me an example of British governments, at least in the last 50 years, that have told private companies how much their employees can earn or merit bonuses?

[Hymie]

For TTT’s edification:-

Let’s suppose as an investment banker the bank pays me a bonus of 0.1 % of any profit I make on my investments for the bank.

I identify that the next big thing is going to be widgets, and any investment (in them) is predicted to give a return of 10%. I could invest heavily in widgets and look forward to an almost guaranteed bonus pay out.

Or I could invest heavily in Bitcoin knowing that over the next 12 months its value could more than double – leading to a very handsome bonus payment. Of course, everyone could realise that Bitcoin has no intrinsic value and its value fall close to zero.

Of the above two investment strategies, the second has the potential to benefit me as an investment banker much more than the first, and so would be my investment strategy. Of course the bank may go bankrupt as a result of all their investment bankers coming to the same conclusion as me – but if my bonus is capped, there would be no point in me making the risky investment in Bitcoin.

[Togo]

^^Banks including Standard Charter, Barclays, Goldman Sachs, Morgan Stanley, Swiss, German and French banks already have invested in Bitcoin. If your point is that a bonus cap would prevent it, then it is right to remove the bonus cap. Yes?

[Atheist]

Paigntonian, the UK govt has legislated for a minimum wage.

[ToraToraTora]

20:57, so none of what myself and others have told you has penetrated, right oh!

[ToraToraTora]

How do I earn my bonus? I don't do banking.

[bobbinwales]

Hymie... your not making any sense to me. If its risky and likely to lead to a fall in value why would bankers invest too much and risk getting no bonus. Is it better for banks to pay £100k pa with potential for bonus of £0-1million, or to pay salary of maybe £500k with limited bonus. Its up to banks to set a bonus system which attract's the best and takes account of profits over a longer term and have proper risk& compliance control and satisfy's ther shareholders

[Hymie]

If I put some numbers on my investment strategy (to assist bobbinwales understanding) – let’s say the bank has given me an investment pot of £100 Million. My almost guaranteed widget investment will get me a bonus of £10,000.
But my Bitcoin investment doubling in value will net me a bonus of £100,000.

Of course if it was my own money – there is no way I risk £100 Million on Bitcoin as I could lose the lot; but it’s not my money, so what do I care if the bank loses £100 Million?

[bobbinwales]

Its up to the bank to have compliance checks and not just let the bankers take ridiculous punts. Its not up to you or me as envious bystanders unless we're a shareholder

[ToraToraTora]

Hymie, stop digging me old china you are WRONG!

[bobbinwales]

Maybe Hymie probably thinks a banker can just put £100m on a horse at 20-1. Why would they do that if there almost certain to get no bonus as there allmost certain not to make a profit

[Hymie]

Me and the whole of the EU are wrong - and TTT's right.

[Hymie]

As you are all aware, there has never been a banking crisis due to bankers taking ridiculous punts.

[ToraToraTora]

"Me and the whole of the EU are wrong - and TTT's right." - err no, you've picked 1 thing out of hundreds and pinned the whole financial crisis on that.

[Deskdiary]

There will always be the odd rogue banker (look at Leeson), which is why banks now have internal robust compliance, security committees at ExCo level, plus of course the FCA, and 99.99999% play by the rules because they have careers to worry about.

Hymie’s naive fanciful nonsense is naive fanciful nonsense.

Stay in your lane and comment on things you know about rather talking cobblers.