Cameron is speaking out strongly against this. With London as the Finance Centre of the world, it would be catastrophic for the UK for banks and financial services companies to move their HQs and operations elsewhere.
I don't think it will be ratified.
The EU should concentrate more on introducing regulation to ring-fence investment divisions from retail.
Makes me wonder who the hell is coming up with these regulations. This would do virtually nothing to improve the banking system, but would ensure that all the corporate headquarters move outside of Europe.
Hope is the denial of reality
Oh wow what were they thinking what kinda crazy shareholders would want to have such a great excuse for controlling the salaries and bonuses of their CEO:s??
"One day, we shall die. All the other days, we shall live."
They're focusing on one industry. They're telling shareholders what they should do and when. And they put a cap on bonuses that even shareholders can't overturn. I realize that you don't give a damn about freedom and free enterprise, but you should at least care about jobs and tax revenues.
Hope is the denial of reality
Like the law doesn't apply to EU subsidiaries in third countries. Or as if American tax-payers are all that happy to become the backstop of all banking in Europe. Foreign money in your banking system is a liability you know.Originally Posted by Loki
Can't be bothered to start a new thread.
http://www.nytimes.com/2013/03/01/bu...r-bonuses.html
If the goal is to move all of European finance to New York, this will be a great regulation.
Congratulations America
Fucking ridiculous
What its got to do with the EU is beyond me too.
You can have those bankers. Just don't expect us to support you financially the next time those great bankers cause the next crash.
When the stars threw down their spears
And watered heaven with their tears:
Did he smile his work to see?
Did he who made the lamb make thee?
Not wanting you to support us, you've done jack shit to support us (and rightly so), we've been bailing out eurozone members. If the Eurozone wants to do this then whatever but eliminating performance-related pay like this has absolutely bugger all to do with preventing a crash.
What's next? A salesperson on commission is to have his commission [a type of bonus] capped at his basic salary? Why does that possibly make sense?
It is rank hypocrisy, populism and has nothing whatsoever to do with fixing underlying problems that need tackling - of which there are many.
Randblade as usually doesn't see the bigger picture. As things stand those bankers have been paid for with money coughed up by taxpayers everywhere, not in the least British tax-payers.
@Timbuk; it's a QMV issue, 'ratification' is not really an issue. As far as I know the UK is the only country opposing the regulation, which means it can't stop it. Also, that whole bluff about 'moving' to other countries isn't really all that impressive if they are working with 'European' funds.
Congratulations America
If his bonus is paid with taxpayer's money, then yes, we absolutely ought to have a say in how much they're paid.
And "performance related pay"? Please. I'm not quite sure what kind of "performance" warrants multi-million boni. Do we really want glorified numbers-in-Excel-pushers to be the highest paid profession in the world?
When the stars threw down their spears
And watered heaven with their tears:
Did he smile his work to see?
Did he who made the lamb make thee?
The boni are not very different from handing over your money to a gambler in a casino who demands to be paid for every lucky bet without wanting to take any responsability for the loss of the principal that ensues in the end due to his continued gambles.
Congratulations America
Agreed.
For non- government -owned banks and financial institutions? Then those numbers that are being pushed into excel by those managers are the largest financial numbers pushed into excel by any profession. I'd rather those number-pushers were extremely highly qualified and extremely well paid.And "performance related pay"? Please. I'm not quite sure what kind of "performance" warrants multi-million boni. Do we really want glorified numbers-in-Excel-pushers to be the highest paid profession in the world?
Which is still an aside from the fact that the banking industry needs regulation. Basel III comes in January next year, but that won't go quite far enough I feel.
You're both wrong. Actually Khen's not wrong since he caveated with an "If" rather than with "everywhere" and the If condition is categorically not met.
If taxpayers are bailing out the banks (as RBS have been in the UK, currently 82% owned by the British taxpayer) then the government as shareholders can and ought to act accordingly. Laws aren't necessary though to act that way - and if they are they can be done by the relevant government. If the EU starts bailing out banks then yes the EU too as either sharehoders or lenders ought to be entitled to put conditions on the funds as to how it is used.
However neither case is correct the are two mistakes:
1: The EU has not directly bailed out some of the banks, national governments have. Therefore its national governments who should set the conditions on what happens with their money. Again, if the EU coughs up the funds then it can and should set conditions.
2: Many banks have not been bailed out at all. HSBC is one of the world's most global banks, operating all over the world, based in Britain but named after and founded for Hong Kong and Shanghai. It could quite easily relocated its HQ outside the EU. It also took not a single penny of any taxpayers funds. Barclays Bank which I bank with also is operating fully private without a single penny of taxpayers funding. Neither of these banks meet your If condition so why should any government (let alone the wrong one) set regulations as if it were their money when it's not?
Not got a problem with bad banks being punished by punitive conditions on funding - but good banks operating privately don't meet that.
Just because you don't understand it doesn't make it wrong. The proposal isn't that bonuses will be capped to avoid multi-million payouts, just that they'll be capped relative to base salary. That's stupid, double base salary and you can double the bonus paid.And "performance related pay"? Please. I'm not quite sure what kind of "performance" warrants multi-million boni. Do we really want glorified numbers-in-Excel-pushers to be the highest paid profession in the world?
You could theoretically have €10mn you can potentially pay someone with. If you offer them a contract saying "€5mn base salary, upto €5mn performance-related bonus" then that's OK under these rules and provide a range of renumeration between €5mn and €10mn per annum. If you offer them a contract saying "€1mn base salary, upto €9mn performance-related bonus" then that's not OK. The maximum payment remains the same, all that's changed is how low it goes if performance pay isn't earned. You want to avoid another crash by legislating across the continent to institutionalise the rewarding mediocrity. Genius
Don't be absurd. Any casino (or bank) doing that would go bankrupt quickly.
The fun part of course is that they all claim to be highly qualified, untill they turn out not to be and the tax-payer is left with a bank bleeding money. Are you quite happy with your ownership of RBS with it's 9bn loss? Brought to you by those highly qualified people after they dropped the ball.
Congratulations America
The notion that the shareholders are able to keep a lid on the pay structure of a bank is laughable, unless that shareholder is the state alone of course, in which case regular use of the whip may cause some sense in renumeration. Same question to you; how much in boni do you think bankers at RBS should get?
Congratulations America
RBS's 82% shareholder is the government.
I'm happier with HSBC and Barclays than I am with RBS or HBOS. I suspect it'd be a lot lower than other banks in a good year (even the non-taxpayer funded banks have had controversies but they should be dealt with accordingly too). I'm quite content to have RBS dealt with by its majority shareholder (the UK government). The EU did not provide the bailout, and RBS is not the only bank.
Those in RBS who've done a good job I'm content to award an appropriate bonus to. I'd rather have a CEO be given a 1 penny peppercorn/minimum wage salary and earn his keep solely from the performance of the business than the other way around.
As it is if someone where to go into RBS now and say "I won't take any more earnings than minimum wage until the bank is turned around and back in profit" then that would be illegal by this as the base salary is lower. How is that helpful?
The net benefit of that bank is -$9bn, why should these people get any pay at all? They should be out on their asses, preferably packing to go to their beloved Hong Kong or New York. Without severance payment.
Also, you're only happy with Barclays and HSBC as long as they keep their paws out of the coffers of the state, and you'll never be able to project when they will take a dive. Just like you couldn't know RBS and HBOS would attach themselves to your necks like just so many albatrosses.
Congratulations America
I read recently about bonuses being held for five years (I.e. If there is a bailout or other problems, less or no bonus is paid) and shares they can't sell for a number of years (which would become less valuable) to make it less about short term risky gains. I think i prefer most of their invoer about that than a high base salary..
If the company had gone bankrupt they would be. So long as its continued as a going concern then its current employees need to be treated accordingly. The company will never become profitable if those who are currently working aren't performing. The solution is not to eliminate performance-related payments but rather to pay more scrutiny to it.
They haven't for 148 years and counting. How long do you expect to wait before a track record is established?Also, you're only happy with Barclays and HSBC as long as they keep their paws out of the coffers of the state
Which is why I am not an economic liberal (right-wing sense) and not anarcholiberal. RBS has in its lifetime paid more in taxes than its got back from the state many, many times over. Just because RBS is getting payments now does not mean we need to slay the golden goose entirely.and you'll never be able to project when they will take a dive. Just like you couldn't know RBS and HBOS would attach themselves to your necks like just so many albatrosses.
Exactly, well said. Share options as bonus is more secure than simply paid whatever as base salary automatically no strings attached.
The thing is that the only reason they don't go bankrupt is because they've got you (the tax-payer) by the balls. By any other measure these banks are bust.
Time-delayed boni are a beginning but still way too rewarding of taking gambles that only generate short term profits that could easily turn into huge losses further down the road. Also, clawing back 100% of something worthless hardly bites quite as hard as some of these people deserve. Let's not forget that besides selling products that were valued too high because they carefully hid the intrinsic risk, in trades of a questionable nature they ALSO were engaged in outright fraudulent behaviour.
As far as I am concerned the average banker is to be looked at as little more than a suited up thief.
Congratulations America
You are still acting as if these are all banks we're talking about and not just some of them (whereas laws will apply to all).
The only reason they didn't go bankrupt is that the service they provide to the country is too bloody important. Regulations etc make sense as a result if they're targetted for the right reasons, eg having a higher percentage of cash reserves requires to avoid bank runs in a liquidity crisis etc.
But capping a bankers bonus with no reference other than the bankers own pay (which isn't capped) ... how does that help?
It's pretty not-ironic to watch a bunch of probable-socialists literally ban incentives.
That would be because all of them are a liability, not just the ones that have been bailed out.
Also I can assure you that regular pay is capped, by the simple fact there are liquidity requirements which would take banks over the cliff if they are too eagerly taking on obligations in the form of hig base pay.
I'd love to see some of these wonderful people to move to Shanghai as threathened; a city in the one country that still actually has capital punishment for crimes of an economic nature.
Congratulations America
That's rich coming from a country that holds every single one of its citizens in financial bondage.
Congratulations America
Exactly. Its an undefendable and hypocritical counter-productive attack that is done purely for mendacious bankers are bad reasons rather than reason.
Giving a more realistic example (very few are on multi-millions bonus or not) then it would not be too unusual perhaps to have someone working under a contract of a base salary of £50k cash with a performance-related element of £150k. Total pay £200k.
Now if this idiotic attack goes through the there's three options for this employee:
1: Bonus element gets capped to his base pay of £50k. Total pay halved, not many can or will accept a 50% pay cut.
2: Base salary gets increased to £100k cash, bonus pay scaled back to £100k. Total pay kept the same.
3: Job sent outside to Zurich, New York etc and they get all the tax benefits.
If the second is done then it pulls back the accountability, it doesn't increase it. Since bonuses are made up in part from not just cash but eg Share Options which have strings attached this even further reduces accountability.
Just to put this in perspective; I think the most fitting incentive for these bankers should involve a piece of rope and lamp post. They should consider themselves lucky that the only thing that's happening is making it a bit more difficult to ferret away they ill-deserved gains.
Congratulations America
Exactly you're not remotely serious.
Because we make people pay taxes?
But seriously, it's one thing for the law to mandate 8% minimum reserve requirements. It's another thing to legislate salaries and fix prices. I don't think "fuck you [insert name of industry/people/etc]" is a legitimate way to craft policy.
Wait isn't that deal a perfect way to encourage excessive and harmful risk-taking behavior or down right criminality?
"One day, we shall die. All the other days, we shall live."
Don't drink and drive, don't drive over the speed limit, don't give booze to minors or let them vote, etc etc etc.
"One day, we shall die. All the other days, we shall live."
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