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When their bad debts rise the press (and any govt party) hits at the banks for their poor risk management (or in the incorrect cases, for their risky "investments"). But when banks don't lend the money to risky borrowers they get hit for not doing enough to help the economy recover Read all comments »
UK banks are drawing the short end of the straw when it comes to bonuses. Not only were they first to be taken to the Treasury and made to swallow various bonus restrictions (clawbacks, 40-60% of bonuses paid in stock, no multi-year guarantees), not only are they at the sharp end of the FSA’s discussion paper positing capital-building before bonuses for “systematically important banks,” but if the Conservatives have their way, they will now be forced to pay all their bonuses in shares.
At least, this is the cunning plan of George Osborne, who wants the FSA and the Treasury to unite in preventing retail banks from paying out cash bonuses, in order that they lend money to British consumers and businesses instead. The Guardian reports that Osborne would like his restrictions to apply to Lloyds, Royal Bank of Scotland, HSBC and Barclays. Investment banks like Goldman Sachs would be exempt.
As Osborne is not (yet) Chancellor of the Exchequer, his wish is unlikely to be fulfilled. However, its mere existence doesn’t bode well for Barclays Capital, which is attempting to shape itself as a global investment banking powerhouse. BarCap will find its recruitment potential severely hampered if it’s banned from paying cash bonuses and rivals like Goldman aren’t.
The Walker review is expected to suggest that all guaranteed bonuses will be banned. (Telegraph)
Lord Turner has given Britain’s banks until the end of the week to justify bumper bonus payouts. (The Times)
It’s worth taking a moment to count the various ways Goldman depended on the government’s good will both during and after the crisis. (DealBook)
Goldman is claiming a total of $2.5bn on the Lehman estate. (NY Post)
Over the past year, we learnt that a crisis in the City leads to a fiscal crisis, as tax revenues implode. (Independent)
“Those earnings are not the achievement of risk-takers,” Mr Soros said. “These are gifts, hidden gifts, from the government.” (FT)
Why do bankers make so much money? (ViewsFlow)
Prince Andrew says bonuses are minute in the scheme of things. (Guardian)
Banks gearing up to spend 50% more on management consultants. (Financial Times)
Former bankers at Dresdner win pay-out. (Financial Times)
Who’s been hiring in the City? (City AM)
KwikFit is hiring nearly 100 people in Lanarkshire. (Insurance Daily)
