Sunday, 3 March 2013

Kafkaesque Bankers Bonus.

I'm not a financial wizard, but I admit that I have a bit of nous. I can usually pick out a good thing when I see it. Looking around at what's going on in banking, I can see a good thing.  I'm convinced that not being a financial wizz kid is a distinct advantage. So I have decided to come out of retirement and make myself available to the banking industry - for a small fee!  I could do that, gizz a job!

I would be happy to take take a break one day a month from cruising the inland waterways. I could then take over from RBS chairman Sir Philip Hampton for half is current salary. I think I can talk a load of bollocks just as good as Sir Philip does. Though I do doff my cap and acknowledge Sir Philip has a lifetime achievement in talking weapons grade bollocks.  I could do that, gizz a job!

I'm coming out of retirement because, with the huge salaries and bonuses many people working (I'm using 'work' in the imaginative sense) in the financial sector are very very well off.  It's no secret, when you are in charge of what you get paid - you traditionally award yourself big pay rises or bonuses. Sometimes you get to award yourself both. I could do that, gizz a job!

You also get the chance to gambol using someone else's money. If you make a loss, you still get a bonus. If you by chance make a profit. That justifies why you need a much bigger bonus than the bonus you get for making a loss. I told you it was easy - you can lose billions of pounds and then "big it up" as being a lot less than it could have been.  I could do that, gizz a job!

Remember: A bank rescue package totalling some £500 billion in loans and guarantees was announced by the government in October 2008. Without this loan the banks would have failed. But the public now own the controlling percentage in the banks. Yet the government still dance to the bankers tune of big salaries and big bonuses.
The public own an 81% share in the Royal Bank of Scotland, which got a £45 billion bail-out at the height of the financial crisis. The bank has just reported, its fifth annual loss since it was rescued by the government in 2008. Since the bank fell into difficulty in 2008, its losses have totalled almost £35bn.
We also hold a 65% share in Lloyd TSB the bank lost £570 m last year. Still, it’s not as bad as 2011, when £3.54 bn went down the drain. The bank was given a £20 bn bailout of our dosh.
Remember: The mantra according to the bankers "If you don't pay big salaries and bigger bonuses as well you can't get the right quality of staff." 

So what's been going on at the publicly bailed out Royal Bank of Scotland? RBS has just revealed staff bonuses of £607 million in 2012 despite losses of £5.2 billion after a "chastening" year. Yes - we reward failure in the banking industry. I could do that, gizz a job!

To prove how good the RBS bankers are. The losses widened from £1.2 billion in 2011. Not only that - after Libor rate fixing, this has also cost the bank £390 million in settlements. Yes, that's right - even after fiddling the figures our bankers still could not make a profit - only a big loss. I could do that, gizz a job!

But that's not all, because they fiddled - they are to be fines imposed. Not to be outdone RBS has revealed another £1.1 billion in provisions to cover mis-selling claims. I could do that, gizz a job!

Remember Crime Does Pay: - No banker will go to prison, be fined, or even appear in front of a court for fiddling or fraudulent mis-selling. No banker will have previous bonus payments based upon fiddling or fraudulent mis-selling claimed back.  In reality the bankers mantra should be. "If you pay big salaries and big bonuses as well - you will never get the right quality of staff." See I told you I could do that, gizz a job!

Franz Kafka's writing has inspired the term "Kafkaesque", used to describe concepts and situations.  The term has transcended the literary realm to apply to real-life occurrences and situations that are incomprehensibly complex, bizarre and illogical.

In a Kafkaesque moment of sheer - I don't give a shit - where's my bonus. The chairman Sir Philip Hampton of the part public-owned bank said "taxpayers may never get back the money used to rescue RBS." I could talk bollocks like that, gizz a job!

RBS chairman Sir Philip Hampton said: "We will do our best to see if the taxpayers' money can be returned. but the bank was in a terrible mess, if you go back four or five years, it needed substantial re-capitalisation. Although we've had a difficult year I think we're on track for recovery. It will be for the government to decide when it sells its shares and how much they can get for them. Our job is to put the bank fully back on its feet." 
One thing that will limit profitability is the prospect of the government selling its stake in RBS. Flooding the market with bank shares. This “overhang” will have to be cleared before the shares really start to perform.

Despite the terrible figures Stephen Hester the head of RBS said he believes RBS will be privatised "in the next couple of years". This will only happen when the bank starts to make a profit. - So the tax payers don't get their money back or a return on their money, but the foreign speculators in Abu Dhabi will make a killing.

In another Kafkaesque moment of sheer - I don't give a shit - where's my bonus. RBS chairman Sir Philip Hampton, when asked why RBS can afford to pay bonuses to its staff but not what the public spent in bailing it out RBS. Sir Philip described the bonus situation as being "toxic for everybody". I could talk bollocks like that, gizz a job!

In another Kafkaesque moment of sheer - I don't give a shit - where's my bonus. RBS chairman Sir Philip Hampton said: "The bonus rates have been falling very substantially. Our bonuses now in our markets business, where all the big bonuses are, are 25%, a quarter of what they were four or five years ago." He conceded bonuses were "still huge", but said "it is a very difficult, competitive marketplace, and if you don't pay what you need to pay you don't get the best people". I could talk bollocks like that, gizz a job!

In another Kafkaesque moment of sheer - I don't give a shit - where's my bonus. RBS chairman Sir Philip Hampton said:  Bonus levels were "tough to swallow" for the pubic, but that levels are falling "slowly but surely". He said "RBS was trying to rebuild customer service and confidence, but that it couldn't be done over night." I could talk bollocks like that, gizz a job!
But what's that on the horizon - oh it's the European Union.

"For the first time in the history of EU financial market regulation, we will cap bankers' bonuses," said Othmar Karas, the Austrian lawmaker who helped negotiate a deal. "The essence is that from 2014, European banks will have to set aside more money to be more stable and concentrate on their core business, namely financing the real economy, that of small and medium-sized enterprises and jobs."

It seems that Banker bonuses could be curbed from 2014. Bankers across the city were cursing Brussels after European officials voted to impose the strictest pay rules in the world on the banking sector, curbing future bonuses. The deal, which will ban bonuses bigger than salaries from January 2014, is a blow to the government which has lobbied against the rules insisting they will backfire. 

But our government won one concession: To protect the obscene amounts paid out in bankers salaries and bonuses. It got the go ahead to allow shareholders to approve of higher bonuses through a vote. That's the same shareholders who sit on the boards of many investment businesses who award themselves equally large salaries and equally large bonuses. They will get to set the size of bonus payments - As their salaries and bonuses are set by the going rate or "market values" anyone care to speculate on what might happen?

I never thought the day would arrive when I would nod my agreement in the direction of the EU. That day has arrived.


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