Outside the marginals

a commentary on the politics that followed the UK 2010 & 2015 elections

Bankers bonuses – history repeating itself

So Barclays results are not as good but their bonus pool is up.

The bank’s total bonus pool for 2013 rose by 10% to £2.38bn, from £2.17bn in 2012, with the investment bank’s bonus pool increasing by 13%.

The details come a day after Barclays released its full-year profit figures.

The bank’s statutory pre-tax profits for 2013 rose to £2.9bn, while adjusted pre-tax profits fell to £5.2bn.

Barclays said its profits were hit by restructuring the bank last year, including its withdrawal from certain lines of business, as well as legal costs.

Overall, the bank’s pay-to-income ratio rose to 43.2% from 40% in 2012, well above the bank’s mid-30s target.
BBC News Website 11 February 2014 Barclays to cut up to 12,000 jobs as aims to trim costs

How does this work?

In a previous post I suggested:

I just wonder whether we in the UK might get some level of control by:

  1. Getting the shareholders to vote annually – in advance – for the size of the executive remuneration pool (to cover salary, benefits, pension, bonuses, golden parachutes, golden handcuffs, golden hellos and all other such payouts etc. etc.)
  2. Any losses made should be recovered from this pool
  3. Any fines charged against the company should be paid from this pool
  4. Should losses or fines exceed the pool, the deficit should be recovered from previously awarded deferred bonuses (share options etc.)

A bonus pool for just this year for just Barclays of £2.83bn (the same sort of scale as the GDP of a small country) should be used to pay fines and compensation first. Let’s look at the scale of compensation paid over the years for: Endowment mis-selling, Pensions mis-selling, PPI mis-selling, Credit Swap Insurance mis-selling, and Libor fiddling. (Outside banking most of these behaviours might be seen as fraud) Why should the shareholders pay?

PPI mis-selling: how much will your bank have to cough up …

(30 Jul 2013) previous scandals including pensions mis-selling of the 1980s, where the subsequent “clean-up” review cost about £10bn; and mortgage endowment mis-selling which cost lenders and insurers about £5bn.

BBC News – Barclays increases PPI and swaps mis-selling provisions

(5 February 2013) Following a review, the bank said total provisions for the scandal involving interest rate swaps were now £850m, and £2.6bn for the PPI schemes.

Barclays hit with £290m fine over Libor fixing – Telegraph

(27 June 2012) Barclays has been fined £290m for attempting to manipulate the world’s benchmarking borrowing rate

I guess these “masters of the universe” believe they should be paid despite the misdeeds of them and their colleagues before the shareholders to whom they are meant to owe a duty. And the shareholders? Pension funds etc. which ultimately means the little people like you and me.

As an order of magnitude let’s compare just today’s Barclays bonus pool of £2.38bn with say the population of the UK at 65 Million. That’s on average £36 from each of us to pay for failure and misbehaviour at Barclays alone. RBS, HSBC, Lloyds, etc. still to come.

“We” are all in this together. The problem is those b******** at Barclays are not part of “us”. So they are the “pigs in the trough” and “we” are at the other end of the pigs!

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