Thursday, February 26, 2009

The costs are colossal, but the costs of not doing it are also colossal,” said Darling

EXTRA: Darling defends Royal Bank of Scotland (RBS) support

London - The British government Thursday defended its renewed large-scale intervention to secure the survival of the Royal Bank of Scotland (RBS) which has announced record losses of 24.1 billion pounds (34.7 billion dollars). Alistair Darling, the Chancellor of the Exchequer, said by offering a massive asset insurance scheme of 325 billion pounds to RBS, the government "recognized the fact that banks need to clean up their balance sheets." The move will enable RBS to separate "toxic" parts of its business from "healthy" core operations with a view to disposing of troubled sections of its business at a later date.

Posted by troy @ 09:02 AM (1207 views)
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9 thoughts on “The costs are colossal, but the costs of not doing it are also colossal,” said Darling

  • wonder how this lot feel now!
    Bank employees set to sue over cuts in bonuses

    By Robert Verkaik, Law Editor

    Tuesday, 10 February 2009

    Britain’s biggest banks face a multimillion-pound legal action brought by their own employees to force them to pay bonuses, The Independent has learnt. Claims are being prepared by lawyers representing scores of bankers working across the financial sector who have been made redundant or told they will miss out on awards this year.

    The final bill in compensation and legal fees is expected to reach hundreds of millions of pounds. No bank will escape unscathed but state-aided banks such as Royal Bank of Scotland and Northern Rock, told by the Government to axe bonuses, are expected to face the largest number of claims.

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  • Any company I’ve ever worked at who pay bonuses, pay bonus based on the overall and collective success of the organisation. If I worked for an organisation that managed to lose 24.1 billion pounds, I would not expect to get a bonus and I would also not expect to have a job.

    It would be an understatement to say that the financial services industry operate under some very odd rules. However, if the bonus payments were written into their contracts and they have met those obligations then they are probably legally entitled to their bonuses.

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  • denzil valid point, but I still wonder how they feel.

    and the retired boss on almost £2000 a day @ 50

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  • Eternal Sceptic says:

    If the banks were not bailed out, they would be bankrupt and the employees would be no more. They should be thankful they still have a job and stop whining about their bonuses. Where else does a person get a reward over and above salary for incompetance.
    Additionally all contracts should have been rewritten as a condition of the bailout. More government incompetance. I could go on ad nauseum but that would be boring!

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  • Either it’s a discretionary bonus or it’s contractual compensation. It seems fairly black and white to me, and I would see little point in spending money on a lawyer to attempt to argue that I deserve a bonus, even if I personally performed well unless there is some contractual stipulation.

    However it appears that the law may not be so black and white in this case, as suggested by this FT article.

    It’s a sad world we live in really, isn’t it?

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  • Lots of bank employees on the lower level get payed poorly like waitresses who rely on tips, they rely on a tiny bonus to shore up there
    poor out of London salaries.
    These employees were not the people who caused this chaos. A bonus they should have!

    As for the upper level, not a chance.

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  • If a company is bankrupt and is only surviving through taxpayer bailouts, how can it afford to pay bonuses?

    ‘Sorry folks, we’ve had a bad year and there’s no spare money in the kitty… but at least you have a job’.

    Many, many people (both prudent and reckless) are having to tighten their belts, because they don’t have the money: why should the taxpayer be funding bonuses for failure?

    The lowly paid staff were actually on the front line, dealing with customers, perhaps they could have been feeding back up the food chain, that things had perhaps gone a bit too far.

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  • It’s funny how the old money has a much more low profile way of spending money, they’ve had angry mobs turning up at their gates in the past and didn’t like it. The new money however has never had this experience and continue to rub the mobs nose in it. If I were the new money I’d hire some private security fast.

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  • Eternal Sceptic says:

    government “recognized the fact that banks need to clean up their balance sheets.”
    Yes well and good, but what about all the small people with evaporating jobs, houses, mortgages and any form of security.
    On a superficial level I would say the view of the government towards the sheople is let them eat cake. According to my limited knowledge of history, the last person that said that did not live very long to regret it.

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