Join the debate

Search

Post your resume

Back

Print

Should the FSA kill bonuses?

14 October 2008

Despite hysterical claims that the FSA is about to come down hard on bonuses, the evidence appears to be to the contrary. In yesterday’s letter to banking bosses, Hector Sants explicitly said he had no intention of determining banks’ remuneration, which he described as a matter for board members.

Instead, the FSA is limiting itself to platitudes. Specifically, it says bonuses should take into consideration risk, profits and annual appraisals. They should also comprise some stock, include a substantial deferred component, and be based on multi-year performance.

None of this will have any impact on the way bonuses are calculated. In the wake of the government’s recapitalisation of the UK banking sector, the real question is whether it should. The German government has been bolder and stipulated a €500k yearly cap on executive pay and a bonus ban in return for its help. Should the FSA have done the same?

Comments (23)

If the FSA kills bonuses, it will kill the City. And if the FSA kills the City, the taxpayer will suddenly be bereft of money to pay Hector and all his civil service pals. I can't see it happening, quite frankly.

View all comments

Bookmark

  • Digg.com
  • Del.icio.us
  • Stumbleupon.com
  • Reddit.com
  • Yahoo.com

Comments (23)

  • If the FSA kills bonuses, it will kill the City. And if the FSA kills the City, the taxpayer will suddenly be bereft of money to pay Hector and all his civil service pals. I can't see it happening, quite frankly.

    JJ Malone 14 Oct 2008

    RECOMMEND Recommended 0 times | Alert Moderator

  • Yes, and what about the fact that the City has killed the economy? And isn't the Taxpayer bereft of money to pay for the mess created by all these imbeciles?

    MrPringle 14 Oct 2008

    RECOMMEND Recommended 1 time | Alert Moderator

  • Bankers work so hard and such long hours and if bonuses are taken away- nobody in their right minds will work those hours. It is CEOs etc who have been paid ridiculous amounts not your every day banker. Blame culture.

    Max 14 Oct 2008

    RECOMMEND Recommended 0 times | Alert Moderator

  • the economy has been living on borrowed time for a long while. this crunch was the product of central bank and government policies years ago - debts are finally being called due. "taxpayers" seem to conveniently forget that they stoked the bubble by demanding credit . Whos tax is being used ? the largest tax payer happens to be the city firms and the employees who work there.  Without the city picking up the slack for the rest of the country everyone can look forward to a massive increase in taxes , reduced public services and drastic reduction in quality of life. Given the horribly ignorant and popularist banker bashing that has been going on - serves you all right. Blame whoever you want - joe bloggs free ride is over

    anon 14 Oct 2008

    RECOMMEND Recommended 0 times | Alert Moderator

  • The day the government restricts renumeration would be a black day. Freedom of contract means employer and employee agree what the pay/terms are - its nothing to do with anyone else.

    Simple supply and demand means you need to pay the best people enough money so they don't join the competition. Banks want to keep traders who are the bank a nice wedge, and so will pay them accordingly.

    Besides, public money is not being "spent" in this rescue plan. An investment is being made - the State is buying a proprietory interest in these banks - which the State is likely to make a killing from. If its at the expense of anyone its actually at the expense of the banks existing shareholders.

    Quant1 14 Oct 2008

    RECOMMEND Recommended 0 times | Alert Moderator

  • bankers are not the only ones who work long and hard hours.

    meihongtan 14 Oct 2008

    RECOMMEND Recommended 0 times | Alert Moderator

  • If bonuses are going to be zero, then basic pay will need to rise. If pay overall (base + decent variable pay) is low, then the industry will be full of muppets. The FSA staff is a good example of "pay peanuts, get monkeys".

    AD 14 Oct 2008

    RECOMMEND Recommended 0 times | Alert Moderator

  • Bankers have destroyed their money machine; public opinion and government involement will change forever the banking environment.... become an entrepeneur and create businesses if you want to want to make money; at least your wealth will have a sense...

    rocco 14 Oct 2008

    RECOMMEND Recommended 1 time | Alert Moderator

  • I fully agree that the pay of bankers really should be capped. The problem I have though is that we are adept at structuring contracts, so it seems virtually impossible for the government to successfully actually do so. Nevertheless, if it was possible to cap my salary and for banks to compete with lifestyle incentives instead, I would be a keen supporter. I've missed too many years of my life already. Working from a home in the South of France? Bring it on!

    Peter Higgins 15 Oct 2008

    RECOMMEND Recommended 0 times | Alert Moderator

  • "Bankers work so hard and such long hours"

    Working hard and long hours to produce what? I am perfectly aware that Fixed Income guys in our bank worked extremely hard and very long hours. Their commitment and hard work cost us $42 billion and thousands of jobs so far.
    I think most people these days would appreciate if bankers stayed at home.

    Alex 15 Oct 2008

    RECOMMEND Recommended 1 time | Alert Moderator

Add your comment

* Mandatory

You have 1200 characters left

Enter the code shown here or sign in / register to skip this step. (What is this?)

Post comment

Jobs

Col3
Col4
Col5
Col6
bottom

Site Information

eFinancialCareers is a Dice Holdings, Inc. company. Dice Holdings, Inc. is a publicly traded company listed on the New York Stock Exchange (Ticker: DHX)