Bankers Bonus's ~ The elephant in the room

  wee eddie 13:19 29 Jan 2011

The bankers keep reiterating that if they reduce their Bonuses they will loose their best staff.

However, they never mention the possibility that their better staff may not be able to get jobs with better benefits.

There are, after all, a limited number of Banks in the world, and therefor, a limited number of top jobs available. Already filled as well ~ so not necessarily available.

Simple Keynesian Economics:~ Many Seekers > Fewer Jobs > Remuneration drops.

Is this an acceptable analysis

Of course a few will emigrate, but many will chose to stay and then there will be more money for the Shareholders or the Borrowers.

  Forum Editor 13:40 29 Jan 2011

Partially - it's true that if a lot of people are on the job market it works in favour of the employers, but it's not as simple as that.

Your argument presupposes that everyone who left the banking business would seek employment in the same field, and that's not likely.

You're also presupposing that banks would be prepared to sit back and take the risk of key people leaving.... and in a competitive commercial world that's not likely either.

Bonuses in the banking world are a cultural thing, and what needs to change is the culture - the whole industry has to act at the same time in order to maintain the playing field as level as possible for all banks. That way, there would be little incentive for highly-paid people to leave one bank and join another.

  jakimo 15:16 29 Jan 2011

The politicians do go on claiming that their hands are tied in restricting the large bonus payments until such times as an agreement can be reached with other countries banking regs.

  userious? 16:29 29 Jan 2011

We're all in it

  gengiscant 17:00 29 Jan 2011

My thoughts exactly.

  morddwyd 20:32 29 Jan 2011

"That way, there would be little incentive for highly-paid people to leave one bank and join another."

And little incentive to do well for their employer, and keep Britain a major player in the financial world.

  DippyGirl 22:29 29 Jan 2011

Sir Philip Hampton -
Large numbers of bankers are paid more than they're worth, the chairman of Royal Bank of Scotland has conceded, because of what he calls a "gangmaster" culture in investment banking.

George Osborne said it was time to "move on" from the hostility directed at the banking sector – but only if a deal could be reached with the City on pay and bonus restraint, and on greater support for the economy in the form of more lending.

I (and probably most people) totally agree with Mr Osborne, but the current round of bonuses suggest we arent all singing form the same hymn sheet (alternative to us all being in it together - because we clearly arent!)

  Grey Goo 00:03 30 Jan 2011

A case of Whom you know rather than what you know.

  Forum Editor 00:47 30 Jan 2011

That's the kind of post that really contributes nothing at all to a discussion. It reflects the kind of simplistic view some people take on what is actually a complicated situation.

The investment banks (for that's the area of the banking industry we're really talking about) have a culture of paying large bonuses. They've all done it.

Suddenly we have a problem in the economy, and bankers' bonuses have become a cause célèbre - it's a story just made for the media, and it's very difficult to justify some of the bonuses that have been (and in some cases still are) paid to bank employees, despite the fact that the investment banking arm of some companies is making considerably more than all the other activities rolled together.

In the first half of 2010, for instance, Barclays bank made a pre-tax profit of £3.95 billion, of which £3.4 billion was made by the investment banking arm of the company.

I don't know what the answer is, but I tend to think that it needs to be a little more subtle than simply saying that nobody must be paid a big bonus. We need these banks to make lots of money, because if they do it's an indicator that our economy is recovering. More profits in investment banking mean that some people have been extremely good at their jobs, and have exceeded the targets they were given. Government imposed curbs on their earning capacity strikes me as a bit of a blunt instrument, but I freely admit I don't have a better suggestion to offer right now.

  Strawballs 01:28 30 Jan 2011

Barclays can pay what they like because they never had to get bailed out with tax payers money but those banks that did should not get the big bonuses all they did was get bailed out making up most of the big defecit every one keeps going on about.

  Kevscar1 06:26 30 Jan 2011

It really is simple, if you take a big bonus for a financial deal and that deal goes south then you become responsible for any losse incurred.

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