Cosmic Schwung
Member
Ah, right.
Is more than a year's salary as a bonus common then? How many people would this be likely to affect?
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European Union to cap bankers' bonuses.
- Thread starter Kurtofan
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Ah, right.
Is more than a year's salary as a bonus common then? How many people would this be likely to affect?
Would that mean we get fresh, up-and-coming banking talent instead?
...
Is there such a thing as fresh, up-and-coming banking talent? I write that and it feels inherently oxymoronic.
zomgbbqftw
Banned
Yes, it is very common. A lot of people are on relatively low basic salaries and they have a 3-7x bonus multiplier based on their annual performance.
The other easy way around this, which is what will be used by the government owned banks, is to increase salaries, but that will have a poor effect on fixed costs. If people don't perform they will still get paid at a higher rate, which is not good.
Look, it suits the banks when the government try and close loopholes, they always do it without thinking about it and end up opening up new avenues for tax avoidance. I'm not saying it isn't possible to close loopholes without opening up new ones, it surely is, I'm saying that the current lot in HMRC and the Treasury wouldn't know how and they refuse to take outside help on this matter.
I'm very fond of England. I don't see why the vast majority of us English should be disadvantaged by the political class' pandering to people like you. How about we switch that around; why don't you leave for Singapore or New York?
zomgbbqftw
Banned
Already on my way to Shanghai. The government is going to permanently lose my tax income. It's not just me, there are so many moving abroad.
Why do you think income tax receipts have been so poor this year? Everyone is leaving.
The top 5% of earners pay 40% of all income tax. If they all leave, then what happens?
Cosmic Schwung
Member
Wow, I don't think I could cope with that sort of pay scheme. Planning ahead must be difficult if a cock-up leads to you being paid far less than you thought you would be at the end of the year.
Anyway, thanks for the answers.
Poor China. Try not to tank their economy, we need them to live.
Are you/they taking new jobs or staying with the same employer, but in different country? If former, i'm sure somebody else will be doing those jobs and paying taxes. I don't exactly see bankers as a special snowflakes that can't be replaced just like almost everyone else.
LemonGremlin
Member
Don't delude yourself man, you're not a fucking superstar. You'll be replaced.
CyclopsRock
Member
Maybe, if you all wish really hard, what zomgwtfbbq's saying won't be true. In the mean time, I hope the government responds by doing things that will affect things.
Good. Reliance on yearly bonuses as the main source of compensation leads to short term thinking by the bankers. "Get these numbers up right now, gotta get that bonus." That was the thinking that got the banking system into this mess. Too much thought on short term gains to look good on the performance report too little thought on mid and long term planning, stability and contingencies in case of problems. Bankers shouldn't be behaving like daytraders.
zomgbbqftw
Banned
Same job, same company, new city. My job won't be replaced in London.
there will be a different top 5%.
industrian
will gently cradle you as time slowly ticks away.
Singapore and Hong Kong will take them in with open arms.
from all taxpayers... just for you beloved banks.
:lol at 'discourage talent'. Bankers have become the scourge of the 21st century. From my previous employment in that sector, never before have I come across such unskilled, generic workers who possess the most incredible egos and ideas of self-importance.
At least lawyers and doctors actually must possess a unique and highly detailed knowledge base specific to their field. Bankers are the very definition of replaceable.
At least lawyers and doctors actually must possess a unique and highly detailed knowledge base specific to their field. Bankers are the very definition of replaceable.
Kamakazie!
Member
I agree at the focus on short term gains being a big concern. This legislation won't stop that though. People will still take big risks to progress to the higher base salaries.
Surely a mechanism for spreadin bonus payments over say a 5 year period, based on performance during the subsequent years, would somewhat help to combat short term views in favour of long term stability of investments?
Top performers can then earn large bonuses in a year, but will only receive a percentage in year 1 and the rest in the following years, with poor performance impacting all bonus pots to be received that specific year, as well as reduce the bonus for that year to be carried forward.
IISANDERII
Member
Shit, if that's what you call 'talent' then the less of it, the better.
WickedCobra03
Member
/thread.
Basically this. I don't agree with it because they are going to find a loophole and limiting is just going to have them change their titles or something. I dunno, there should just be an oversight board that monitors banks inner-going-ons just because these private institutions are so closely tied to the government and peoples livelyhoods.
chaostrophy
Member
I think the best solution would be to nationalize banking. Make issuing loans, investments, etc. an exclusive domain of the government. Set bankers salaries roughly equivalent to workers at the post office or DMV.
CHEEZMO™
Obsidian fan
I like it.
Talk about catching the tail and missing the elephant. The point is not to opt out, but to close the loopholes that people will use for that tax avoidance. Such as the one's you yourself will eventually be using.
Bonuses are great and all, but it is true that some are absolutely ridiculously high, and just game the system. This move essentially forces people to pay higher wages than to pay higher bonuses, which is fine if you ask me. The next step would be to close the loop holes of people exploiting this.
I think I'd literally work myself into an joyous, epicaricratic coma from such a move.
They actually start closing those tax avoidance loopholes companies such as Vodfone, Starbucks, Google, Amazon etc take advantage of that cost us tens of billions, and skew the market competitively.
Royal Bank of Scotland lost ÂŁ5bn last year. They still paid out ÂŁ600m in bonuses. I'm sure they get by.
zomg, how predictable are bonuses? Are they are tax-friendly way of paying you salary or are they genuinely based on performance? I think a lot of the bad blood comes from huge bonuses (which I'm sure are an exception rather than the rule) and also bonuses paid even when there are huge losses.
Ether_Snake
安安安安安安安安安安安安安安安
For every one moving abroad, another will take your place, and won't bitch about the bonuses.
CyclopsRock
Member
That sounds terrifying. The government has an obligation to its people beyond simple economics, but that can lead to a horrible conflict of interest. Unless you're a sillicon valley billionaire, almost all businesses require a loan or investment to start up. Almost all homes require a mortgage to be purchased. Almost all cars are purchased on credit. What happens when the government tells you you're too much of a liability to have that, or that they otherwise don't want you to? More worryingly, what happens if they never do? These are the same people that gave Freddie and Fannie the targets that cracked open the sub-prime market. These are the same people that happily accept political funding in exchange for beneficial regulatory systems. These are the same people that GAF frequently touts as being the linchpin of the military industrial complex. And these are the people you want deciding whether or not you can buy a house, whether or not you can start a new business? Terrifying.
QuicheFontaine
Member
Seriously if I got a bonus of 2x my salary, I'd take 2 years off work.
zomgbbqftw
Banned
RBS made an operating profit of ÂŁ3.1bn, the losses were associated with them taking a charge against the value of their own debt (a new and very stupid regulation from the EU). Sure a ÂŁ5bn loss makes for a nice headline and it sells newspapers, but the reality is that RBS are formidably profitable once again.
Well they are paid out on annual performance targets so by October most people know what kind of bonus they are in line for. Also, most bonuses are paid on personal performance, not group level performance. If the risk division fuck up and lose the bank ÂŁ10bn is it the fault of the investment division who bring in ÂŁ5bn in profit?
If I were to perform poorly I would not get a bonus, it's quite simple. If I perform well and bring money in I will get what I am contractually obliged to, regardless of whether group performance is good or bad.
It's not a tax wheeze, trust me. Bonuses are taxed as regular income. It's a nice money spinner for the government.
Well, firstly I don't see how they're more terrifying than the current system. Secondly, it's not like you couldn't just get a loan from France or Sweden if England turned you down...
CyclopsRock
Member
Well, firstly I don't see how they're more terrifying than the current system. Secondly, it's not like you couldn't just get a loan from France or Sweden if England turned you down...
Because right now there are multiple lenders. Like with all nationalised industries, there is the potential for the "product" (be it an education, water, a train route or, indeed, banking) to be done more efficiently due to economies of scale and the need for no profit. But when they don't work, you're fucked. You can't go elsewhere. For things like phone lines under BT, that was annoying and potentially harmful for businesses. But for loans and investments, the government suddenly has the power over who can and cannot buy a house, who can and cannot start a business. Does that really sound like the kind of power you'd be happy and content for the government to wield? Buying a house without living by the government's financial terms becomes the reserve of the super-rich who can buy them outright.
thanks, so more like a salesman job where you take a low basic and bet on hitting your targets to get decent remuneration? (simplifying things obviously)
that RBS thing sounds nuts.
"All restrictions do is increase paperwork - the machinery still moves despite them."
zomgbbqftw
Banned
Yeah, it's a bit like that.
It's just a stupid EBA regulation, Barclays showed a ÂŁ500m loss for the full year for the same reason, their operating profit was ÂŁ7bn and ÂŁ5bn after tax. When people read headlines or watch the BBC they only get half the story. So sure the BBC ran a bunch of stories about ÂŁ600m bonus pools and ÂŁ5bn losses, but the reality is very different.
Zaraki_Kenpachi
Member
What was their position at the firm? Bankers and analysts do have a highly detailed skill set. Doesn't sound like you were working with actual bankers.
RibbedHero
Member
Half my department's been moved to HK or Singapore, wouldn't mind moving to HK myself. Either way this won't affect me, the way my bonus is paid (yearly bonus payments spread over 4 years amongst other circumventions) I avoid any bonus taxes anyway. I'm quite junior too, so my bonus flies under the radar of the OWS types.
If the Eurozone wants to regulate then it's their loss, just like the FTT they want to impose.
If the Eurozone wants to regulate then it's their loss, just like the FTT they want to impose.
SouthernDragon
Member
"I'm going to leave the banking industry because my bonus is only going to be my yearly salary."
Said no one ever.
Said no one ever.
RibbedHero
Member
"I'm going to leave the EU because my bonus is only going to be my yearly salary" said a lot of people, every day.
RibbedHero
Member
Not here in the UK, the City is incredibly important for the national economy. In the UK, along with countries like HK and places like NYC, the financial sector is a dominant factor in the economy, not a friction in the least.
SouthernDragon
Member
Their choice to make. If they don't want to pay what it costs to live in a certain country or society, they are free to leave as their financial ability dictates.
I'd like to see how well they function in foreign societies. It's not for everyone, although I suppose they can build their own little enclaves abroad.
Edit: If finance is an overly-dominant force in the economy, yes, it can be a source of friction.
Baki
Member
Cry moar lol...
But seriously, you bust your ass for 80-90 hours a week. You more than deserve a nice bonus for doing so.
People forget there are loads of 'mid-level' and entry level people in the industry who are hurt by these reforms.
The answer to the credit cruch is smarter regulation not capping bonuses from hardworking people.
empty vessel
Member
Good. A healthy society doesn't require its financial sector to have "talent" or high growth.
The government funds your income in the first place, so its loss is no big deal.
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