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Will Osborne Cave In Over Rbs Bonuses?

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http://www.bbc.co.uk/news/business-25739565

The normal limit for bonuses set by the EU is equivalent to one year's pay but the EU rules do allow this to be doubled with shareholder approval.

However, the Treasury had already launched a separate legal challenge arguing against the EU's right to set any limits on banking bonuses at all, saying that such intervention could lead to an increase in base pay and undermine financial stability

It's not as if paying high bonuses caused financial instability is it?

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http://www.bbc.co.uk/news/business-25739565

The normal limit for bonuses set by the EU is equivalent to one year's pay but the EU rules do allow this to be doubled with shareholder approval.

However, the Treasury had already launched a separate legal challenge arguing against the EU's right to set any limits on banking bonuses at all, saying that such intervention could lead to an increase in base pay and undermine financial stability

It's not as if paying high bonuses caused financial instability is it?

It's nice to know that maintaining the right of the management of failed enterprises to pay themselves and selected employees insane amounts of money is a top government priority. I suppose that if the government doesn't, then they might run off and break someone else's economy.

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It's nice to know that maintaining the right of the management of failed enterprises to pay themselves and selected employees insane amounts of money is a top government priority. I suppose that if the government doesn't, then they might run off and break someone else's economy.

Not in the rest of the EU though as the UK are the only people opposed to the new rules.

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Would it be churlish to mention that the blame for the collapse of RBS lays squarely on the shoulders of one man and that 5 years down the line the people who's bonuses are to be capped have zero responsibility for the finanacial mess.

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Would it be churlish to mention that the blame for the collapse of RBS lays squarely on the shoulders of one man and that 5 years down the line the people who's bonuses are to be capped have zero responsibility for the finanacial mess.

Goodwin set the culture that is probably true but it was the bonus culture and bad regulation that led to people below him doing what they did. Part of preventing that from happening again would be by not creating the same incentives that caused the problems that happened before.

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Would it be churlish to mention that the blame for the collapse of RBS lays squarely on the shoulders of one man and that 5 years down the line the people who's bonuses are to be capped have zero responsibility for the finanacial mess.

In 2008 RBS was the largest bank in the world. To suggest the pattern of behaviour that led to its collapse was entirely the responsibility of one man is the height of absurdity, even for you.

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Would it be churlish to mention that the blame for the collapse of RBS lays squarely on the shoulders of one man and that 5 years down the line the people who's bonuses are to be capped have zero responsibility for the finanacial mess.

When the company is off life support it can think about paying bonuses.

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In 2008 RBS was the largest bank in the world. To suggest the pattern of behaviour that led to its collapse was entirely the responsibility of one man is the height of absurdity, even for you.

All as a result of the mad decision to pay top dollar for AMN AMRO once the financial crisis was already underway.

Which was of course largely if not wholly driven by Sir Fred's ambition.

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Would it be churlish to mention that the blame for the collapse of RBS lays squarely on the shoulders of one man and that 5 years down the line the people who's bonuses are to be capped have zero responsibility for the finanacial mess.

How do you know it was only one man? When did we have the investigation into what happened at RBS in the runup to its collapse?

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I don't think they ever stopped thinking about them did they? Talent could move elsewhere etc etc.

I have to wonder what the conservative/right wing reaction would be if workers British Leyland had, after a state rescue, had a strike to demand a bonus of twice their annual salary..

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I have to wonder what the conservative/right wing reaction would be if workers British Leyland had, after a state rescue, had a strike to demand a bonus of twice their annual salary..

Presumably they'd ask who gave them a contractual right to such a bonus and why?

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Would it be churlish to mention that the blame for the collapse of RBS lays squarely on the shoulders of one man and that 5 years down the line the people who's bonuses are to be capped have zero responsibility for the finanacial mess.

It's a majority owned public sector business.

Quite apart from the notion that simply because someone works in a business where their stock is money assets rather than baked beans or flooring they shouldn't be allowed to steal said stock.

They add no more value than a shelf-stacker moving goods around but add a far higher risk to society, as evidenced.

Edited by R K

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I have to wonder what the conservative/right wing reaction would be if workers British Leyland had, after a state rescue, had a strike to demand a bonus of twice their annual salary..

Quite. The double-standards make me want to weep. :angry:

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Presumably they'd ask who gave them a contractual right to such a bonus and why?

An entity that is now bankrupt.

Unless you are now arguing that employment contracts should continue after a company has gone bankrupt (effectively). Which means you are somewhere to the political left of me...

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They add no more value than a shelf-stacker moving goods around but add a far higher risk to society, as evidenced.

I'd except that city trading is a skilled occupation.

I'm extremely dubious as to how skilled and how that skill is measured.

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Sounds like the UK could be out of the EU by 2016. Osborne is not happy about the FTT which will hurt his buddies in the City and he doesn't want the UK to join the Eurozone. So, it is going to be Osborne and the bankers vs the EU dictatorship. I frankly don't know which is worse. The EU are going to try and bring in the FTT this year. That along with the results of the EU elections in May in which Eurosceptic "right wing" parties are going to form a pact, should be a very interesting year and some potentially major political earthquakes ahead;

http://www.theguardian.com/politics/2014/jan/15/banks-eu-reform-plans-george-osborne

Edited by fru-gal

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Here's a good starting point: RBS collapse investigation - in five parts

Seriously, a newspaper article based entirely on hearsay? For you that's enough to feel like you know what happened?

Where were the seizures of email archives and spreadsheets and databases and recordings of meetings?

Plus, if you actually read your own link:

"We have been paying you to be executives, but you were followers," Stephen Hester bluntly told a meeting of senior RBS managers in January 2009, as he gave what became known as his "six lessons speech".

Hester, the former chief executive of British Land and a career investment banker, had only joined the RBS board the previous August but became chief two months later as Sir Fred and other managers blamed for the collapse were booted out and a new management team brought in.

The response of the departing executives to their dismissal was generally quiet acceptance.

Er, so I guess it wasn't just one guy?

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An entity that is now bankrupt.

Unless you are now arguing that employment contracts should continue after a company has gone bankrupt (effectively). Which means you are somewhere to the political left of me...

The bailout happened 5+ years ago, presumably the vast majority of employees will now have contracts that post date that arrangement.

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such intervention could lead to an increase in base pay and undermine financial stability

So a non performance related pay scheme will create more instability than one based on risk taking designed to enhance bonus entitlement?

Really?

Or has the arrogance of these people grown to the point where they can't even be bothered to concoct a vaguely plausible excuse to continue their looting?

Compare and contrast Osborne's latest speech condemning the evils of excess in the welfare culture to his supine acceptance of the City's culture of fraud and graft.

But to be fair- if you allow the proceeds of crime to become an essential component of the economy you are hardly in a strong position to say no to the criminals, for fear they might take their racket elsewhere.

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Seriously, a newspaper article based entirely on hearsay? For you that's enough to feel like you know what happened?

Best I could do in the time with a quick Google, have you got a better source?

Er, so I guess it wasn't just one guy?

Fair enough, some other former members of the board failed to restrain the CEO when they should have, the vast bulk of the blame however remains on Sir Fred.

Interesting quote from chapter 5 of my link:

On his last day at the bank, the deeply religious Crowe, who retrained as a priest, sent out an email to his team apologising for his part in the bank's failure. Many colleagues, though, could still not fathom how a man known for his intelligence and rigour could have taken part in the collapse.

Approaching him as he was about to leave, one senior trader said, "my God Brian, how did this happen?" Crowe blamed the failure on Sir Fred's decision to fund the wholesale bank with short-term debt rather than with longer-dated financing, considering the extra 10bp to 20bp annual cost an unnecessary expense.

For Crowe this merely confirmed his belief that Sir Fred had long been out of his depth running such a large and complicated bank. In late September as RBS's borrowing costs hit new highs, his frustration boiled over.

At a meeting of senior managers called to discuss the problem in the bank's London office he was appalled as he heard Sir Fred suggesting a series of half-baked measures the bank could employ to ease the pressure on its funding. As Sir Fred began to outline one controversial idea Crowe abruptly cut him off.

"Fred, I really think you should learn something about banking before you pontificate on matters you don't understand," said Crowe, to the open-mouthed astonishment of colleagues who had never seen anyone so openly stand up to their domineering chief executive.

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Best I could do in the time with a quick Google, have you got a better source?

No I don't, because there was no government investigation, at least not that we know about. The facts are not in the public domain. It's not possible to talk meaningfully about what happened at RBS without documentary evidence.

Did Fred the Shred really manage to blow up one of the world's biggest banks without ever talking to financial regulators, politicians, the Treasury, central bankers etc along the way? Did none of these people twig that something might be going wrong? If they did, why didn't they try to stop it? If they didn't, what on earth were they being paid to do?

The "rogue trader" story suits the Establishment down to the ground. Funny how they never bothered to dig any deeper.

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No need for an investigation. banking is a confidence based business. either you have it.. or you don't. can you please for just one minute think of how many suicides and collapsed businesses there would have been if they had let 2 of the 4 UK clearing banks go under? 5 years on... everyone good will have now moved on long ago if they have any sense.

must be hard for them trying to recruit people... although i guess its not exactly much of a growth business at the moment. I would only consider going any where near it as a contractor on a decent daily rate.

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