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View Full Version : RBS bankers get £950m in bonuses despite £1.1bn loss



AtW
25th February 2011, 00:18
More than 100 bankers at Royal Bank of Scotland were paid more than £1m last year and total bonus payouts reached nearly £1bn – even though the bailed-out bank reported losses of £1.1bn for 2010.

The chairman, Sir Philip Hampton, said the number of millionaires was lower than a year ago and said a quarter of the group's 18,700 investment bankers would not receive a bonus from the £950m payout pool agreed with UK Financial Investments, which controls the taxpayer's 83% stake in the bank. Unions were baffled that any bankers were getting bonuses.

The 2010 figure is an improvement on the loss of £3.6bn a year ago and the record-breaking £24bn loss in 2008. Even so, the shares were down 3.6% to 45.7p as the losses were bigger than expected and profits in the investment bank fell to £3.4bn from £5.7bn a year ago.

More: RBS bankers get £950m in bonuses despite £1.1bn loss | Business | The Guardian (http://www.guardian.co.uk/business/2011/feb/24/rbs-bankers-bonuses-despite-loss)

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Now surely, this is taking the piss - bonuses are a cost to a business, and they could have very nearly break even if they had not paid out any bonuses, effectively the reason they lost money was this bonus payout. WTF shareholders of that bank are doing, it's not like they are fragmented into small groups that can't deal with this outrage? :eyes

thunderlizard
25th February 2011, 01:07
If they didn't pay big bonuses, they wouldn't be able to attract the kind of high performers that only lose £1bn and require a reasonably large taxpayer bailout. They'd have to hire second-rate financiers, who might lose £2bn and require an even larger taxpayer bailout. It's the best system that the free(ish) market has come up with, and therefore it is the best possible one.

hth
tl

AtW
25th February 2011, 01:11
That's rubbish excuse - fundamentally it violates principle that bonus comes only if firm is profitable, if it's not profitable you should be grateful to keep your job in the first place, nevermind any massive bonuses.

If they can't run firm to make profit then they should be fired.

If nobody else can be found for reasonable money to turn profit then that firm should be sold in pieces to the highest bidders and shareholders should invest money elsewhere.

All of those choices acceptable, what's not acceptable is when staff basically pockets money and leaves shareholdes with losses.

stek
25th February 2011, 01:14
I'm with TL on this one, much as it winds me up...

thunderlizard
25th February 2011, 01:18
Company profitability is not necessarily a fundamental principle of bonuses.

If your company makes a loss one year, but your cleaner still did a really good job and made all your surfaces consistently sparkly-clean, you'd still pay him/her his/her contractual performance-related bonus, I hope.

Likewise, if your bankers had been given a target to lose less than £3bn this year, and they only lost £1bn, then to fail to pay them bonuses of several hundred million pounds would be practically an infringement of their basic employment rights. They'd be sobbing all the way to the nearest tribunal.

AtW
25th February 2011, 01:31
If your company makes a loss one year, but your cleaner still did a really good job and made all your surfaces consistently sparkly-clean, you'd still pay him/her his/her contractual performance-related bonus, I hope.

No - if company is making a loss then it can't pay bonuses - if good job is done to keep it afloat and set it on the right course that will lead to profitability then this person (including directors) should feel content that they still got a job with shareholders not demanding it to be cut, and prospect of proper earned bonus when company becomes profitable.

This of course assumes long term interests put before short term - something that can't be expected from modern investment bankers.

Your example of target loss is laughable - just because it is a target does not mean you get cash bonus for reaching it - keeping your job is a massive bonus you know! I've seen first hand some "sales-lead" companies if you know what I mean, but compared to bankers they are angles because when retail outlet does not hit target then no bonus is given - tough tulip, be grateful you don't get sacked for not hitting profit target.

IMHO bankers should only get shares in bank as a bonus and they should not be able to sell them, use them as collateral etc for 10+ years with dividends being the only cash element they get for a long time.

thunderlizard
25th February 2011, 01:37
No - if company is making a loss then it can't pay bonuses

Says who? What else do you think it can't do? Pay salaries? Pay its rent? Buy stock?


Your example of target loss is laughable
I'm glad you got there in the end. I'll go to bed now.

AtW
25th February 2011, 01:47
Says who? What else do you think it can't do? Pay salaries? Pay its rent? Buy stock?

Company has to pay necessary amounts such as rent, salaries, power etc.

Bonus is not something that should be guaranteed or expected to happen if company is not doing well (ie losing money).

In some companies (like Waitrose) annual bonus makes big difference to fairly low paid workers, there is no such need to pay out million quid to guys who already are on massive salary, frankly they should have some ability to hold off that new Porsche purchase until firm becomes profitable again.

Pogle
25th February 2011, 06:33
Company has to pay necessary amounts such as rent, salaries, power etc.

Bonus is not something that should be guaranteed or expected to happen if company is not doing well (ie losing money).

In some companies (like Waitrose) annual bonus makes big difference to fairly low paid workers, there is no such need to pay out million quid to guys who already are on massive salary, frankly they should have some ability to hold off that new Porsche purchase until firm becomes profitable again.

Yep, I'm with ATW on this one :wave:

TimberWolf
25th February 2011, 07:57
Yep, I'm with ATW on this one :wave:

WPS.

Mich the Tester
25th February 2011, 08:10
I think I could lose them less than that. Maybe just a few million. What kind of bonus should I get?

MarillionFan
25th February 2011, 08:16
WTLS

I was at a do a few weeks back
and met a senior contractor from RBS who worked in the business. He had been there for five years and basically said that RBS had loads of perm vacancies but could not get anyone to fill them.

Other banks would pay more, were not tainted with the label of failure and government owned and therefore the candidates they did get were below par. They said they had to pay bonuses otherwise they'd be in real shit.

He mentioned that they had a large contractor base though because of it.

Mich the Tester
25th February 2011, 09:50
WTLS

I was at a do a few weeks back
and met a senior contractor from RBS who worked in the business. He had been there for five years and basically said that RBS had loads of perm vacancies but could not get anyone to fill them.

Other banks would pay more, were not tainted with the label of failure and government owned and therefore the candidates they did get were below par. They said they had to pay bonuses otherwise they'd be in real tulip.

He mentioned that they had a large contractor base though because of it.

When I was at a big Dutch bank which buggered up quite badly I noticed that the place was basically a revolving door for both contractors and permies.

Basically people knew that as soon as the profits were 0.1% below 'analysts expectations' there'd be a round of redundancies with as much logic as someone pullling a lever on a 'redundancy randomiser'.

In other words, you're hired until your number comes up. In such circumstances any rational individual will just ensure he makes as much money for himself as possible between being hired and being fired. Individual need becomes king over the needs of the organisation, the shareholders or the customer. Nobody cares what the consequences of his actions will be in five years' time because he knows there's very little chance of him being around to deal with the consequences.

In such a culture, the obvious consequence is that people will take risks that are irresponsible at the organisational level. The second, less obvious, but equally damaging consequence is that you have to pay people more and more money to join, so as to mitigate their personal risk of losing their job.

Now then, there IS a particular kind of bank which didn't screw up badly with the credit crunchie crisissy wotnot, DID NOT require state handouts, AND haven't paid out huge bonusses to people; they're cooperative banks. One big difference is that they don't have a reputation for mass redundancies or hire-and-fire policies; basically, people's jobs are pretty secure until such time as the bank assists them to get a job somewhere else (and I don't mean that tongue-in-cheek; I know a number of people who went through Rabobank's 'social plan' and got excellent jobs in other businesses, often clients of Rabobank).

So I think really it's bollocks to suggest you have to pay huge bonusses to attract good people. What you have to do is build a reputation for looking after your people well, give them a good environment to work, give them the training they desire and require, and look after them when you decide you don't need them any more. That will attract a different type of person, perhaps a less risk-oriented person, but in any case not the sort of person who'll get himself a two million euro bonus by making you twenty million euros in the short term and losing you twenty billion euros in the longer term.

Sounds idealistic, but it seems to have worked better than the ´every man for himself´ management style.

SueEllen
25th February 2011, 10:14
That's rubbish excuse - fundamentally it violates principle that bonus comes only if firm is profitable, if it's not profitable you should be grateful to keep your job in the first place, nevermind any massive bonuses.

If they can't run firm to make profit then they should be fired.

If nobody else can be found for reasonable money to turn profit then that firm should be sold in pieces to the highest bidders and shareholders should invest money elsewhere.

All of those choices acceptable, what's not acceptable is when staff basically pockets money and leaves shareholdes with losses.

Unfortunately if hiring management write contracts where staff have to meet targets and will get bonuses for them but forget to put in the contract that the bonus will only be paid out if the client is making a profit - then the bonuses have to paid.

If they are not the company will not only have to pay expensive lawyers fees they will lose in court and damage their reputation amongst staff causing even more staff to leave.

Mich the Tester
25th February 2011, 10:17
Unfortunately if hiring management write contracts where staff have to meet targets and will get bonuses for them but forget to put in the contract that the bonus will only be paid out if the client is making a profit - then the bonuses have to paid.

If they are not the company will not only have to pay expensive lawyers fees they will lose in court and damage their reputation amongst staff causing even more staff to leave.

In other words, the banking 'profession' (which is actually an insult to more respectable professions like prostitution) has still not learnt any lessons and banks are just as abysmally managed as before they broke the world.

BoredBloke
25th February 2011, 10:21
Yep, I'm with ATW on this one :wave:

I'm not!

If you are in a section of the business that performs well, then why not get a bonus for your part in reducing the losses. Without the bonus then those in the part that are performing well would simply bup sticks and move to a company that is paying a bonus, meaning that the company is left with second rate staff and the losses next year become greater.

Just because the business as a whole made a loss, it does not mean that every part of the business made a loss!

SueEllen
25th February 2011, 10:22
In other words, the banking 'profession' (which is actually an insult to more respectable professions like prostitution) has still not learnt any lessons and banks are just as abysmally managed as before they broke the world.

Some staff would have been there before the crisis so are still on contracts where bonuses are paid if targets are met.

Plus If you are busy making staff redundant which probably includes some of HR themselves, then you are not going to be going through everyone's contracts to change the terms.

Mich the Tester
25th February 2011, 10:23
I'm not!

If you are in a section of the business that performs well, then why not get a bonus for your part in reducing the losses. Without the bonus then those in the part that are performing well would simply bup sticks and move to a company that is paying a bonus, meaning that the company is left with second rate staff and the losses next year become greater.

Just because the business as a whole made a loss, it does not mean that every part of the business made a loss!

Why not close the bits that make a loss? (by the way, I know why)

BoredBloke
25th February 2011, 10:23
WTLS

I was at a do a few weeks back
and met a senior contractor from RBS who worked in the business. He had been there for five years and basically said that RBS had loads of perm vacancies but could not get anyone to fill them.

Other banks would pay more, were not tainted with the label of failure and government owned and therefore the candidates they did get were below par. They said they had to pay bonuses otherwise they'd be in real tulip.

He mentioned that they had a large contractor base though because of it.

When I started at JPM, there was a leaving do every week for permies and contractors joining RBS.

AtW
25th February 2011, 13:12
I was at a do a few weeks back
and met a senior contractor from RBS who worked in the business. He had been there for five years and basically said that RBS had loads of perm vacancies but could not get anyone to fill them.

:rollin:

What a lot of boll0x. So there are thousands of experienced contractors on the bench and they can't fill the vacancies? Drop requirement like "needed 1000 years experience in IB" and you'll get plenty of good candidates that can learn quickly even if it to gain 2-3 years IB experience before they jump.

Mich the Tester
25th February 2011, 13:13
:rollin:

What a lot of boll0x. So there are thousands of experienced contractors on the bench and they can't fill the vacancies? Drop requirement like "needed 1000 years experience in IB" and you'll get plenty of good candidates that can learn quickly even if it to gain 2-3 years IB experience before they jump.

If you think logic plays a role in the western banking system you are an idiot.

AtW
25th February 2011, 13:22
If you think logic plays a role in the western banking system you are an idiot.

I am not talking about logic - I am referring to some basic competence in problem solving: if you need right people you find a way to get them (at the right price), even if you have to take some chances - ffs, that's what trial period is for.

MarillionFan
25th February 2011, 13:25
I am not talking about logic - I am referring to some basic competence in problem solving: if you need right people you find a way to get them (at the right price), even if you have to take some chances - ffs, that's what trial period is for.

In your case AtW, a trail period is something you offer graduates when you don't want to pay them much for working on SKA.

Mich the Tester
25th February 2011, 13:26
I am not talking about logic - I am referring to some basic competence in problem solving: if you need right people you find a way to get them (at the right price), even if you have to take some chances - ffs, that's what trial period is for.

You are talking about logic. The logic of hiring the right person for the job, which is unlikely to be the person who buggered it up last time. This logic is beyond western bankers.

AtW
25th February 2011, 13:27
In your case AtW, a trail period is something you offer graduates when you don't want to pay them much for working on SKA.

I said trial. Yes we ask for trial period for all people who are new to the business, this is normal practice in the UK, I am sure even banks have it.

Mich the Tester
25th February 2011, 13:29
I said trial. Yes we ask for trial period for all people who are new to the business, this is normal practice in the UK, I am sure even banks have it.

AtW, did you notice, just a couple of years ago, that western banks, especially RBS, lost more money than had ever been earned in the history of the milky way galaxy and had to be rescued by governments that were already going bust?

That's how competent they are.

AtW
25th February 2011, 13:31
That's how competent they are.

That was just due to them being greedy more than competent.

Mich the Tester
25th February 2011, 13:32
That was just due to them being greedy more than competent.

Can a greedy person ever be competent to look after somebody else's money?

AtW
25th February 2011, 13:35
Can a greedy person ever be competent to look after somebody else's money?

Probably not, but we are talking about IT manager whose greed can be best served by providing the best people to support traders of tulip, that's another matter in my view.

MarillionFan
25th February 2011, 13:49
Can a greedy person ever be competent to look after somebody else's money?

Yes. Robert Maxwell.

TimberWolf
25th February 2011, 13:49
I've repped you both for some most excellent banker bashing, which should be a national sport.

However in the interests of 'fairness' I might also take this opportunity to pass on some also excellent looking comments that take an interestingly diametric position on the issue of the parasitic bwankers and their ill gotten games and who should be jailed rather than handsomely rewarded for their work, posted on HPC:



Hang on, bonuses are taxed as income, are they not? And at the higher rate, so the net tax take would be higher on bonuses than on corporate profits, yes? So why the fook does everyone keep whinging about bank bonuses?
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Absolutely - and RBS has so many losses to carry forward, they won't be paying corp tax in the UK for a long while. This way, the State collects 50% of the money back in taxes - which goes towards paying off the 'equity' (read made up printed balance sheet money) put into it.

Royal Bank Of Scotland To Pay Nearly $1.5Bn In Bonuses After Losing $1.7Bn - House Price Crash forum (http://www.housepricecrash.co.uk/forum/index.php?showtopic=160127&st=0)

Mich the Tester
25th February 2011, 13:52
I've repped you both for some most excellent banker bashing, which should be a national sport.

However in the interests of 'fairness' I might also take this opportunity to pass on some also excellent looking comments that take an interestingly diametric position on the issue of the parasitic bwankers and their ill gotten games and who should be jailed rather than handsomely rewarded for their work, posted on HPC:

Good quote.

That really is a fine example of wbanker logic. Bank loses bazillions of pounds. Government give bank bazillions of pounds and guarantees all dodgy investments. Bank takes bazillions, gives them to wbanker, who pays 50% in tax to government. Isn´t wbanker generous and shouldn't we all be grateful to wbanker?

FFS :suicide:

TimberWolf
25th February 2011, 13:55
Good quote.

That really is a fine example of wbanker logic. Bank loses bazillions of pounds. Government give bank bazillions of pounds and guarantees all dodgy investments. Bank takes bazillions, gives them to wbanker, who pays 50% in tax to government. Isn´t wbanker generous and shouldn't we all be grateful to wbanker?

FFS :suicide:

You left out the bit about government minister gets to be a bwanker when he fooks up in office. Everyone is a winner.

Mich the Tester
25th February 2011, 13:58
You left out the bit about government minister gets to be a bwanker when he fooks up in office. Everyone is a winner.

We've given them enough chance to learn from the errors of their ways. Time to start shooting the bastards.