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(no subject)
2012
unknownj
It would appear that Robert Peston doesn't think that any employee of any bank that received taxpayer assistance should receive any bonus.

The rationalisation for this?
If taxpayers hadn't rescued those banks then those employees wouldn't have jobs, let alone bonuses
Yes.. and? That's something of a non-sequitur, akin to telling a small child that they can't have sweets, because if Daddy hadn't gone to work today, Mummy wouldn't have been able to buy sweets in the first place. I don't really see how it follows. So I elected to read on, just in case he started making more sense.
So perhaps all bankers should simply count their blessings that they work for banks perceived to be so important to the prosperity of us all rather than for Woolworths - where there was no taxpayer bailout and 30,000 were made redundant.
I see. So what he's saying is, provided the final outcome for bank employees isn't unemployment, they should just be grateful. It could be worse.

So I guess I should receive a 10% pay cut, and just be happy that I've still got a job. I don't even care about my own bonus, until this story broke I hadn't even started thinking about it. Were I to lose it for the sake of keeping people happy, I wouldn't feel overly bad about that, though it would still be useful to have.

But the point is, I have yet to see a good justification for not paying any bonuses, at least none given by anybody who understands how a bonus is intended to work. Two members of staff might each receive £17,000 basic salary per year. One of those people has hit all their targets, the other has not, but has still performed adequately. The bonus allows the company to pay the better performing staff member £18,000 while the other gets only £17,000.

Now, this money not being a part of the basic salary means that next year, if the person who received a bonus doesn't meet their targets, the company has no obligation to match their previous salary. That makes good sense business-wise - the pay rate is conditional on performance rather than guaranteed as part of the employment contract. Next year, you can put that extra thousand pounds somewhere else instead if you want.

It also makes a lot of sense because it gives you a way to reward strong performance, without which it might be considerably harder to motivate staff to work well. If two people with different levels of work are paid the same because discretionary bonuses aren't available, then the person performing less well has no motivation to improve, and the person performing better is going to wonder what the point is, beyond customer satisfaction (which is nice, but doesn't pay the bills).

But finally, this idea that bankers ought to sit back and just be grateful that they still have jobs holds no more water than telling anybody within the UK economy that they should be grateful that they still have banks. The Tesco employee should be glad they don't work for Woolworths, right..? And they still have an economy that works, thanks to taxpayer funding - so why should they get a bonus?

Ultimately, the taxpayer did not fund banks for altruistic reasons. It wasn't some favour that the banks ought to repay by scrapping bonuses - it was an investment, with certain strings attached, and a promise from the government that it wouldn't lead to political interference in the day to day running of the banks. That's why an independent company was set up to hold the taxpayer's interest in the banks. The extent of what the government gets out of it are the favourable terms on which they bought into the industry,

On a personal note, I've spent about £750 on shares in the bank over the last few years. I've also been given (conditional) free shares by the bank, and that shareholding was worth (at its peak) £7,000. As a result of the financial crises, that's now worth £500 - the thousands of pounds worth of free shares haven't even kept my initial investment from shrinking. And there are people far worse off than me in that regard, who have lost tens of thousands.

At this point, a bonus might feel like the least the banks could do for their most loyal shareholders and stakeholders, to make up for the financial decisions that have massively harmed their (usually un-diverse) investments.

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No, but to be frank, I don't give a toss what you go to work for, the bonuses are being paid out of the profits that I help to create :oP

I was merely pointing out that it was a very poor analogy.

Until such time as the tax burden on the average taxpayer increases, they're not actually experiencing that though. Not to mention the fact that thanks to the public's narrow minded view, I suspect that the tens of thousands of people who are losing their jobs would begrudge anything that looks like it's going well for banks.. Should we also give up cost of living payrises because "Hey, at least you're not getting laid off"?

So the value of joe publics opinion is based on their level of taxation? I pay over £26k a year in income tax alone. Does that therefore mean my opinion holds more water than yours? Yes I am assuming this was your intended point but it does honestly read that way. Its a little too capitalist for even my tastes.

Whats amusing is I am guessing you've not been through the stress of redunancy whilst carrying the burden of the welfare of your family. So the glib response regarding begrudging banks anything thats going well for them is one made, in all honesty, from a perspective of inexperience. I hope you never have to go through it.

Not at my bank ;o)

I have to appreciate the irony as I have just closed a call with a director from your bank.

Its not being done to stop people being offended. If it is being done, it is through a very practical business reason which is employer branding and brand protection. These are the intangible sides of business which can prove to be worthwhile investments in themselves.

In the bigger picture though, given our govt doesn't have a bottomles pit of money its the cost of the govt not having that money today that probably irks most people.


I was merely pointing out that it was a very poor analogy.

Yeah, I'm known for those... :o)

So the value of joe publics opinion is based on their level of taxation? I pay over £26k a year in income tax alone. Does that therefore mean my opinion holds more water than yours? Yes I am assuming this was your intended point but it does honestly read that way. Its a little too capitalist for even my tastes.

Yeah, I see what you mean. What I meant to say was that at present, "the taxpayer" that bought into the banks has yet to receive a bill. From "the taxpayer"'s point of view, they have done nothing yet because everything is just being kept as a huge minus on the balance sheet until such time as the government starts trying to raise taxes.. So for "the taxpayer" to then say "We helped you so you need to do what we say" is kind of.. off.. I'm not saying that help wasn't rendered, but that help was to preserve the economy of the whole country, not to keep individual companies solvent, and thus far "the taxpayer" hasn't had to pay for any of it, but has reaped the rewards of a financial system that still functions. So this idea that people have that banks have some sort of obligation to them because of something that they might have to pay for in taxes later is a bit premature.

Whats amusing is I am guessing you've not been through the stress of redunancy whilst carrying the burden of the welfare of your family. So the glib response regarding begrudging banks anything thats going well for them is one made, in all honesty, from a perspective of inexperience. I hope you never have to go through it.

I've been through the stress of my father being made redundant a number of times, it sucked on every occasion. However, an attitude of "this sucks for us, things should suck for other people too" just doesn't hold - creating injustice for others so that everything appears equitable is a really dumb idea of "fairness".

Its not being done to stop people being offended. If it is being done, it is through a very practical business reason which is employer branding and brand protection.

Yes, but now you're just toying with semantics. It's being done to stop people being offended because if they are offended, then that harms the brand.

It came as no surprise to learn that Eric Daniels has declined to take his bonus, and I wouldn't be surprised (or particularly upset) if it transpired that I wouldn't receive a bonus myself. What bothers me is that it would be necessary to tell a profitable business that the amount that they've set aside for staff remuneration (typically as low as they can get away with anyway) needs to be further reduced to remove the bonus portion.

Ultimately, the public probably doesn't care if we had a 4% pay pot or a 3% pay pot. I doubt they'd be unhappy with the 4%, they don't know what context those figures exist in anyway. But they would be unhappy with us putting aside 3%, plus 1% in discretionary bonuses for regular staff, because they hear the word "bonus" and think "Oi!".

So if it's just part of the standard pay, that's fine, but idea of a bonus is a huge no-no because people have listened to too many soundbites in which "bonus" is a dirty word.

(to be continued..)

These are the intangible sides of business which can prove to be worthwhile investments in themselves.

I agree, but that line of thinking also justifies "We decided not to give you pay rises this year, instead we're spending the money on advertising because it's a better business decision". That doesn't make it the right decision to make - keeping staff happy is also an important (if intangible) side to the business.

Again, I'm talking more about staff in branches who have met very specific sales targets set out at the start of the year - I have no idea how our bonuses are even worked out, or if I would even get one anyway.. :o)

In the bigger picture though, given our govt doesn't have a bottomles pit of money its the cost of the govt not having that money today that probably irks most people.

I might not be giving "the taxpayer" enough credit here, but I rather suspect that while that is the case, and the government would quite like that money, that's not what most people are thinking now. Unless they work in the industry or have been paying special attention, they're not going to know the terms under which the banks were funded - I bet half the public is of the opinion that the banks were just given a ton of money, or that it was done because the banks were going bust or something.

So they sit there saying "They'd have been bankrupt if we hadn't given them all that money", when really it's that "They would not have had capital reserves sufficient to meet new government mandated targets if the treasury hadn't bought into the banks under very favourable terms".

When you put it the second way, it stops seeming so greedy for banks that are still generating profits (which has nothing to do with their capital reserves and is therefore not driven by what the government has done (except that the banks have avoided unprofitable runs on savings because of it)) to reward the staff that most contributed to those profits. Without the staff members who are helping the bank to turn a profit, the government will never get its money back, and the taxpayer will end up footing the bill.

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