Guidance please.

[Sqad]

I agree that public money had to be "pumped" into the banking system, anything between £100 billion to £175billion depending upon which report you read.

I was under the assumption dictated by the Prime Minister that attached to these public cash injections were "tough, stringent and legally binding" conditions.

My question.....which is not meant to be political :

Did these "tough, stringent and legally binding" conditions, include bankers bonuses?

[daffy654]

Do you mean the big bosses Sqad or normal bank counter staff?

There seems to be one rule for the big bosses who get million pound bonus' and another for the 'minions' such as my fiance who works in a high street bank. All counter staff used to get a small bonus (£300-£500 total per year) twice yearly that was calculated on their sales performance at that branch for the year. They still have to 'push' the products and services,meet targets etc. so that the bank profits but no longer get the bonus because the general public are up in arms about it and have demanded that the bonus be stopped. Counter staff don't exactly earn a fortune (£13,000 PA) and we relied on the Christmas bonus to stop us getting into debt at this time.

[Sqad]

daffy......no, the counter staff are not my real main concern.....it is the 5,000 top bosses that I had in mind.

[daffy654]

It is galling to see them still getting the huge bonuses after the bail-out! I bet their families will be getting the best of everything for Christmas paid for with government (tax payers) money.

[R1Geezer]

The problem here is that there is no distinction between the tea lady and the ceo, when they talk about a bonus pot of 1.5 billion they mean all the bonuses from a couple of hundred to 6 figure sums. To answer your question, there has been no actual legislation just general mutterings of intent so really the government has no direct control. However they do own most of the shares in, for example RBS and as such could well impose some sort of bonus limit/freeze or abolish it all together. The problem there is that the banks say they will lose staff and the overall picture will be worse, to that I say bollux, let them walk, they didn't seem to be very competant when they where pi55ing away billions in toxic mortgages, so I'd say call their bluff. However I expect the goverment will do sod all and hope it goes away.

[Sqad]

Zeuhl/daffy.......I think that you both have missed my point.......it is not that theses boys are going to get their bonuses.....good luck to them.......nice work if you can get it.

My point is that these" tough, stringent and legally binding" conditions, must have been drawn up in a legal document which may or may not have been publicised...............I just wonder if the "Banking Bosses Bonuses" were mentioned?

On a lighter note if any other these bankers have been found out to have mistresses, then the press would have a hey-day....."Banking, Bonking Bosses Bonuses" .............just a joke.

[BillyBB]

They did not have a clue what they were doing but dreamed they were 'saving the world' to quote our dear leader. Again and again we see that they did not carry out the slightest due diligence before committing vast sums of borrowed money ie sorting fred the shreds pension etc. If they were employed by any investment firm they would have been sacked for gross misconduct. Sadly it is all coming from the luckless taxpayer (and future generations of taxpayer).

Mark Wadsworth (accountant) has been saying the following since the first run on Northern Rock.
"If banks hadn't been bailed out then the each bank would have had to come to some private arrangement with its bondholders to defer repayment of the bonds or to convert them to share capital. Like CIT Group in the USA. The outside world (borrowers and depositors) would barely have noticed the difference."

It's often referred to as a debt for equity swap and it happens in business all the time. RBS etc had assets that could be sold off to raise capital, they could restructure into smaller seperate arms of finance, there are many options. Sadly we have weak ministers who love to grandstand and posture as great leaders. Leading us to the longest reccession is where. State owned banks? it's a communists wet dream but didn't work so well for the populace in the USSR, or Cuba, or Venezuela, or ever.

[BillyBB]

Further reading - it's fun though I promise, how else could £200 billion have been spent.

http://blogs.wsj.com/...adnt-been-bailed-out/

[buildersmate]

A good answer BBB, I thought.
One needs to understand what the Government money was pumped in for - to give the banks more working capital so they could start to lend again. They didn't have liquid assets (cash) they had assets in the form of securities (property, whatever) which they couldn't turn into cash - and if they could those assets were worth less than the money loaned to those borrowers.
We shall find out over the next few days what those 'tough stringent and legally binding conditions' actually were but it is my guess that it didn't include constraining the salaries of employees. Whilst Directors of companies always have their remumeration packages approved by the shareholders (and that now includes the Government in the case of some of these banks), it would be really unusual for the power of shareholders to extend to controlling employees salaries (and these banker are not Directors - just obscenely highly paid employees.
So the Government is now finding ways to make it extremely unattractive for these companies to pay bonuses to obscenely-paid staff - like clawing part of the bonus profits pool back, by upping the employers' NI contributions. This will demonstrate to the Directors that they cannot win this one.

[David Black]

Don't worry Squad the government is going to solve the problem for you without any new laws.

All the actual talent is leaving the state banks RBS and Lloyds to jobs that have no restrictions such as Barclays or HSBC.

You are shortly going to be a shareholder in two giant banks that are managed by crap not only at the board level but at the individual profit centres.

Brown and co are probably halving the value of these "Assets" in the next few months.

But it makes good politics though this New Labour nonsense.

[buildersmate]

Good arguments there, David, but not ones that I buy.
It assumes that the banks that are doing OK (and hence have survived relatively unscathed to date) actually want to enhance the teams of their investment banking people. Since the total volume of banking activity is down, I don't buy that argument. The laws of supply and demand work here - a greater supply pushes the market price (the salary) required to be paid downwards.

[BillyBB]

Yes but they are still not lending at levels that can really help SMEs. Partly because the govt changed the rules on how much liquid capital (govt bond and gilts) they must retain. This not only too late to stop the crash but also to help the govt sell gilts.
Folks such as I complained when many building societies changed to banks because that meant they could lend and invest more as a ratio to deposits. That's why Nationwide and other Bdg Socs have not been badly affected. (The croc held too many 125% mortgages on devalued houses, but thats just bad management and greed)
Meanwhile our artificially low interest rates are reinflating the property bubble and it gets more and more likely that the inevitable period of high inflation will be longer and worse than ever. Of course by then the culprits will be in opposition and will happily blame the new crew.

[LeMarchand]

Apparently the finance industry has pointed out that if they go elsewhere (as they are threatening to do so if they don't get their bonuses) then the UK will lose out on £7 Billion in Corporate Tax.

£100-£200 billion given to the industry, and £7 billion earned via tax through the industry. I'm not quite sure why this seems such a great loss. Mind you, I can see why the system went down the pan when their top guys have such poor maths skills!