UK NEWS
AT LAST, AN END TO THE FAT-CAT BONUS CULTURE
IT'S OVER: Fat-cat bankers have kissed goodbye to their 'obscene' bonuses as part of the bail-out
By Martin Evans
FAT cat bankers were last night forced to kiss goodbye to their “obscene” bonus culture as part of the Government’s £37billion bail-out package.
After asking the taxpayer for help, some of Britain’s biggest banks will be forced to overhaul the way they reward senior staff.
Chancellor Alistair Darling announced that no bonuses would be paid this year at the Royal Bank of Scotland, Lloyds TSB and HBOS, which were effectively nationalised in the unprecedented deal.
The Government will also take seats on the boards of the rescued banks to keep their executives on a short leash and monitor how the companies are run.
Standing beside his Chancellor, the Prime Minister Gordon Brown said: “Going forward, rewards will only be based on performance and long-term value creation.
“Our action is driven by our values. For this Government – and I believe the whole country – the guiding idea is fair reward for hard work, effort and enterprise: not incentives for irresponsibility or excessive risk-taking for which the rest of us have paid.”
The bail-out, which could lead to tax rises, became necessary after bank share prices plunged, threatening a collapse of the entire sector.
Mr Darling said there would be significant strings attached to the deal in order to ensure there was an end to the sort of greed-fuelled excess which many believe is largely responsible for the current crisis.
In addition the Financial Services Authority has vowed to clamp down on the bonus culture throughout the City of London, warning banks there would be “immediate action” unless reforms were forthcoming.
In recent years high-flying traders have enjoyed cash bonuses often running into millions of pounds, for their contribution to their employers’ profits. But the system has been described as deeply flawed because it encouraged bankers to take massive risks with other people’s money, creating instability in the market.
After finalising yesterday’s rescue package it was announced that four of the main players in British banking would be stepping down.
RBS chief Sir Fred Goodwin agreed to forego his £1.2million pay-off while HBOS chief executive Andy Hornby said he would not take his £1million golden goodbye.
However, both men have enjoyed massive rewards in recent years with Sir Fred receiving more than £4million in salary and bonuses last year and Mr Hornby pocketing more than £1million the same year. Sir Fred is being replaced immediately.
Also leaving are RBS chairman Sir Tom McKillop, who will retire from the board next April, and HBOS chairman Lord Stevenson.
In a clear statement of intent Hector Sants, the FSA’s chief executive, wrote to banking heads yesterday expressing concern that excessive bonuses had contributed to the present market crisis.
He said the FSA would keep bonus levels under intense scrutiny in future.
The FSA is looking for an end to the practice of linking bonuses to one year’s performance. Officials will also visit banks unannounced to ensure bad practices are eliminated.
Meanwhile two reports yesterday highlighted the extent of the bonus culture.
Figures from the Office for National Statistics indicated the amount paid out last year in bonuses rose from £26.5billion to £28bn.
In addition, a report from the Incomes Data Services revealed that salaries for top executives rose by 11.5 per cent last year to an average of £3.5million.
The report said directors were prospering while the economy was entering tougher times and more workers risked losing their jobs.
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END TO FATCAT BONUSES
14.10.08, 5:41pm
And this will last as long as it takes to read ,there will be a way to misrepresent it ,and the banks and goverment will all think us mere mortals are gullible fools and not intelligent enough to understand the complex world of banking ,it will now be under cover payoffs and done thru the ppl we all love and trust nulaborwho are a beacon of honesty and truthfulness , i dont for 1 minute think this will be upheld (bit like mandelson being sacked,resigned ,never to see his likes in goverment again ,)but like i said we are gullible fools .
power to the people
• Posted by: paul1263 • Report Comment
THEY MAY TRY TO STOP THE 'FAT-CAT BONUS CULTURE'..........BUT!..........
14.10.08, 1:48pm
.........will MP's put the stops on their thieving from the taxpayer funded expenses and other gratuity payments??...........will they hell as like!!
Now we'll probably see these bankers want to go into politics!
• Posted by: moorlok • Report Comment
AT LAST, AN END TO THE FAT- CAT BONUS CULTURE
14.10.08, 10:24am
Change is desperatly needed. 25% mamals face extinction, how many other species, rainforests, coral reefs, bumble bee.
A newspaper columnist writes on the weekend, "If all of China wants to live as us in the West, another 3 planets the same as Earth would be required..! What of India, Africa, all places, N.S.E.W.
Probably need the Milky Way..hence the space race..!
• Posted by: juan01 • Report Comment
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