Show the bonus Bankers with our feet/money

mr_fishbulb

boomish wrote: »

So my wife said to me last night after seeing the news on the governments climb down over curbing these bonuses, "I feel like taking all our money out of the bank" after a few seconds thought I said why don't we? I have been with Barclays for over 30 years, so how hard can it be? Will it make a difference I dunno but maybe if others did it as well it might.

Yay lets all create runs on the banks so the inter-bank lending dries up and the BOE has to step in a a lender of last resort to stop them collapsing. Some will have to be taken over by the government to stop them from going under. They will be propped up with borrowed money which will add to our deficit and then paid back by cutting public services.

That will sort everything out.

Cmdr_Bond

NFH wrote: »

...

It annoys me when so many people complain about the headline figure of bonuses without understanding the economics of why they're paid or understanding anything about investment banking. It's just jealousy. Although I work in investment banking myself, I'm an independent consultant so I don't receive bonuses. However, those that do earn bonuses thoroughly deserve every penny.

I fully understand where you are coming from, and agree with you for the most part.

The problem comes when certain members of the board (and this is not solely related to banks) get a masive bonus when it has been proved that they have not earned it, or worse made extremely bad decisions.

It's like the golden handshakes they get when they get sacked. If you or I fcuked up and got the boot, we would be lucky to get our last months pay but this lot end up with millions, why?

ses6jwg

Yet another Daily Mail/ Express inspired thread about "fat cat bankers bonuses", and as usual full of twaddle and hot air

CLAPTON

in all other industries, if huge profits can be made by a relatively small number of people then there is a rush of new entrants to the industry to share in the profits

now why doesn't this happen in investment banking?

why aren't there queues of new investment banks wanting to join in and grab a piece of the profits?

because government regulation makes it very difficult to start a new bank and so maintains the huge profits that feed the huge bonuses

we need to review that basic way that banks are regulated and open up more competition

NFH

CLAPTON wrote: »

in all other industries, if huge profits can be made by a relatively small number of people then there is a rush of new entrants to the industry to share in the profits

now why doesn't this happen in investment banking?

When do you think this sudden rush should occur? Generation of large profits by investment banks has been going on for years. There are plenty established players who have huge amounts of capital to trade. It's not easy to come along and create a new investment bank because of the capital required to trade in the interbank markets. As an example in the FX markets, everything is quoted in millions, so "twenty quid" means GBP 20 million, and USD 5 million is considered "small". A large trade would be "half a yard", meaning half a billion, derived from the French "milliard". I hope the terminology alone gives you some idea of trade sizes. If you think anyone could come along with that kind of capital and set up a new investment bank, think again! People with that kind of capital to spare are more likely to trade the capital with an existing bank than to set up a new bank to market-make to customers.

NFH

Cmdr_Bond wrote: »

The problem comes when certain members of the board (and this is not solely related to banks) get a masive bonus when it has been proved that they have not earned it, or worse made extremely bad decisions.

And those bank bosses that truly have earnt it by keeping their bank out of trouble and profitable, like Bob Diamond, gave up their bonus in recent years. I hope he keeps his well deserved bonus this year, which could be as much as £9 million.

anna42hmr

i agree that whilst bankers bonuses are high, they have become the scapegoat

what about those who work in the branches, call centres etc for very low pay and rely on bonus scheemes etc would you abolish bonuses for them as well? whilst a bank may pay x millions in bonuses, very few people actually get the extrortionate amounts that people are on about, and many lower level staff rely on the bonus systems to boost their salarys!

- what about kicking up a fuss and not watch the bbc - they are permanantly funded by the british public yet no one on here seems to be kicking up a fuss about their bonuses! http://www.dailymail.co.uk/news/article-1186201/BBCs-bonus-bonanza-Programme-budgets-jobs-cut-staff-share-17m-rewards.html

The BBC paid its staff £17.5million in bonuses last year as Britain lurched into its worst economic crisis for a generation...
The total is down from previous years - in 2006/7 the BBC dished out £20million in bonuses - but critics are amazed that given the bleak economic situation, this year's payments remain so high.

the tax payer and licence fee payers bankroll their bonuses every year! so why should the banks be targeted alone, yes i understand that tax payers money has been used to bail out the system, however we are in a huge deficite as a country and that doesnt stop the local authorities etc paying out bonuses etc

CLAPTON

NFH wrote: »

When do you think this sudden rush should occur? Generation of large profits by investment banks has been going on for years. There are plenty established players who have huge amounts of capital to trade. It's not easy to come along and create a new investment bank because of the capital required to trade in the interbank markets. As an example in the FX markets, everything is quoted in millions, so "twenty quid" means GBP 20 million, and USD 5 million is considered "small". A large trade would be "half a yard", meaning half a billion, derived from the French "milliard". I hope the terminology alone gives you some idea of trade sizes. If you think anyone could come along with that kind of capital and set up a new investment bank, think again! People with that kind of capital to spare are more likely to trade the capital with an existing bank than to set up a new bank to market-make to customers.

really, is there really insufficient capital in the world to set up a new investment bank?

and if people with that money can make more trading with an existing bank then why doesn't an existing bank use its capital trading with another exising bank as they would presumably make more profit.

NFH

CLAPTON wrote: »

really, is there really insufficient capital in the world to set up a new investment bank?

No, not insufficient capital, but insufficient incentive or reason to do so for someone with the capital.

CLAPTON wrote: »

and if people with that money can make more trading with an existing bank then why doesn't an existing bank use its capital trading with another exising bank as they would presumably make more profit.

They do. It's called proprietary trading, and there's often a desk dedicated to it in each asset class. But the investment banks' primary purpose is to service their customers rather than proprietary trading.

gt94sss2

daveyjp wrote: »

All banks benefitted from the bail out, Barclays and HSBC always seem to be excluded, but if the bailed out banks had gone under Barclasy and HSBC would have taken a serious hit as they all borrow off each other.

This is a old line repeated by politicians and others who should know better... as what they are effectively arguing could be applied to any industry.

Also, some banks (such as HSBC) don't borrow from other banks - they lend money.. and I believe HSBC is on record as saying it would have been better if some of the banks in trouble had been allowed to go bust..

Regards
Sunil