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Do Bankers Really Deserve Their Multi-million Pound Pays? - Business (6) - Nairaland

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Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by Sagamite(m): 10:17pm On Dec 15, 2009
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Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by Sagamite(m): 10:27pm On Dec 15, 2009
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Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by Sagamite(m): 10:29pm On Dec 15, 2009
No2Atheism:

@sagamite

thanks . . . i don post the thing tire . . . up to 3 times . . .the spambot jsut dey delete am . . .

No problem, mate.   wink

No2Atheism:

- Personally, I would never pay any form of insurance if I can legally get away with it . . . simply because the very nature of insurance itself is fraudulent. If you can give someone money to insure your business and property, why not pay yourself with to insure it yourself so that when you need the money you can actually retrieve the money. Insurance companies are just like a legalised mafia that is forcing people to pay for protection that is (in most cases) never provided when the actual problem actually occurs. The US health industry is one example.

Insurance?  grin

This na advance warning to all of una. If I hit your car, na kpeme be that o, na "you don hit my car, oyinbo repete" as my insurance company no go pay one dime.  grin

The kin lies wey put for that application to bring the price down, una go dey shake. No be me dem go rob when I have not been in accident and I no be crazy driver but yet they would want to charge me highly based on my age, sex and car type.

Awon Barawo!!!  grin
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by 4Play(m): 11:43pm On Dec 15, 2009
all these things are subjective and they all appeal to some social sentiments that will not thrive under no economic setting except under a regime in China or Korea.

I don't see how an obvious observation that an activity could be simultaneously under-regulated and socially useless be deemed an anathema to a capitalist society.

I dont know what you mean by what is socialy responsible in the issuance of a CDO but i know a CDO will not exist if there are no underlying asset that is backing it up.
Sure, the value of a CDO is derived from the loans that compose it, however, that is besides the point. If I run a gambling firm that allows betting on football games, the fact that each bet is based on something, a football game, doesn't make such gambling socially useful.

CDOs and other instruments are tools banks have been using for close to a decade now and why is the noise about the crash getting a lot deeper than it should.
It could be the small matter of the catastrophic costs of unregulated speculation using these derivatives - £850bn in Britain's case

Are the bankers the only people that witnessed downturns in their activities recently?
what happened to car manufacturers? what about oil moguls? have we forgotten about the dot.com bubble?

That's like comparing a major earthquake to a mere thunderstorm. The downturns in these other sectors pale in significance, there's simply no comparison. In fact, in regard to oil, the run up in oil prices in 2007 is partly a result of leveraged speculation in the futures market. Again, blame bankers.

Oh i agree, the bankers got bailed out ! Cool, you have to just bail them out or switch totally to a socialist state where the govt becomes the solitary allocator of the damned resources.

What we have now is major state intervention in private companies because of bankers' misdeeds, how does that further your argument.

If you still trust us to make you rich, if you still wanna ride a car you cant afford, live in a house you cannt pay for, or plan for tomorrow with you lean and meagre resources, then bailing us out can only make sense like the coming again of Jesus!

Wetin this one dey talk?  grin We are talking of highly sophisticated financial products in developed countries which do not aid economic growth and a Nigerian banker is talking. I don't know whether they even use Direct Debits in that blighted country.  grin

The overall question is to what purpose all these kinds of trading foster economic growth. It's mere gambling, except that unlike people gambling on say football, the consequences of such gambling on derivatives going awry is catastrophic for society at large. In effect, the profits are privatised by the bankers and the losses borne by society.

The notional value of the derivatives market at the end of '07 was nearly $600 trillion. This has to be curbed as negative externality as it has little meaningful social value.
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by 4Play(m): 11:56pm On Dec 15, 2009
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Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by 4Play(m): 11:58pm On Dec 15, 2009
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Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by tkb417(m): 8:38am On Dec 16, 2009
hahahahaha

4play shey na me u dey call ordinary Nigerian banker

my deals are outside Nigeria usually cos i work with one of the top IBs in the world so dont even think am grin grin grin

u dey crase cheesy

Saga
i didnt listen to the prog cos i was in a conference
ill check it frm their site
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by 4Play(m): 8:04pm On Dec 16, 2009
Chei, triple posting. This spambot is useless.
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by 4Play(m): 1:00am On Jan 10, 2010
With banks' earning season kicking off next Friday, it's bonus time!

The banking conglomerate, which will on Friday be the first Wall Street bank to report its fourth-quarter results, is on track to offer the record pay-out thanks to a resurgence in investment banking.
Analysts estimate that the world's biggest banks will pay more than $65bn to their staff over the next fortnight despite efforts by governments in Europe and the US to restrict excessive remuneration.

JP Morgan's pay-out looks set to be the highest ever offered by the bank. Based on analyst consensus, it will be 28pc up on 2008 and 2007 levels, in line with a 50,000 increase in staff, accumulated when it swallowed up Bear Stearns and Washington Mutual.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6958528/Record-bonus-pot-at-JP-Morgan.html

Imagine if this money was ploughed back into dividends for the long suffering shareholders or used in beefing up capital positions which is necessary in the light of the latest Basel proposals
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by debosky(m): 1:05am On Jan 10, 2010
4 Play:

With banks' earning season kicking off next Friday, it's bonus time!
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6958528/Record-bonus-pot-at-JP-Morgan.html

Imagine if this money was ploughed back into dividends for the long suffering shareholders or used in beefing up capital positions which is necessary in the light of the latest Basel proposals

The banks will argue that they will lose 'top talent' to other banks if they fail to pay bonuses. You can't simply re-write rules in a single year. The banks are making bumper profits and since their staff have been promised bonuses, they should be paid.

Either the banks reform their reward policies (or are forced to) or this will inevitably contiune.
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by 4Play(m): 1:06am On Jan 10, 2010
Read and weep:

The world's biggest investment banks are expected to pay out more than $65bn (£40bn) in salaries and bonuses in the next two weeks, reinforcing the view that it is business as usual on Wall Street and in the City barely a year since the taxpayer bailout of the banking system.

Despite efforts by Alistair Darling to deter banks from handing out multi-million pound bonuses through the introduction of a 50% windfall tax, City sources believe that the biggest employers will absorb the cost of the tax rather than cut the size of the bonus pools they amass throughout the year.

This will mean that while proceeds from the tax could top £2bn – more than four times the £550m estimated by the chancellor in the pre-budget report – the government will have failed to alter the traditional bonus culture in the City.

http://www.guardian.co.uk/business/2010/jan/08/bonus-time-city-banks
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by 4Play(m): 1:16am On Jan 10, 2010
debosky:

The banks will argue that they will lose 'top talent' to other banks if they fail to pay bonuses.

Their definition of top talent seems to take in a lot of chaff.

Let's bear in mind that the most egregious bonuses go to the traders. These traders make a lot of money because they take a lot of risk. There is a pertinent question as to whether banks, who are guaranteed by the Govt, should be engaged in such risky trading. If the implication of stricter regulation of the bank's compensation regime is that they lose their best traders to hedge funds and the rest of the 'shadow banking' system, so be it. At least, these hedge funds do not have to depend on Govt bailout.

The banking sector should go back to what it does best; taking deposits and providing loans to entrepreneurs. Leave the bonus culture and the attendant risk taking to the shadow banking system.
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by debosky(m): 1:24am On Jan 10, 2010
4 Play:

Their definition of top talent seems to take in a lot of chaff.

Let's bear in mind that the most egregious bonuses go to the traders. These traders make a lot of money because they take a lot of risk. There is a pertinent question as to whether banks, who are guaranteed by the Govt, should be engaged in such risky trading. If the implication of stricter regulation of the bank's compensation regime is that they lose their best traders to hedge funds and the rest of the 'shadow banking' system, so be it. At least, these hedge funds do not have to depend on Govt bailout.

These hedge funds will be part owned by banks or some other arrangement, so it'll simply be moving the problem to a different location waiting to happen. Trading, while risky is still an integral part of how markets work. I don't buy the idea that simply because the banks are currently guaranteed by the Govt that they should be prevented from doing what they do.

In any case, the govt expects to make a profit from their investments in the banks - how on earth do they think that will happen if they prevent the banks from participating in these risky (but highly profitable) activities? Counter productive if you ask me.


The banking sector should go back to what it does best; taking deposits and providing loans to entrepreneurs. Leave the bonus culture and the attendant risk taking to the shadow banking system.

Banking is a lot more than that - you can't possibly draw those distinctions at the moment, so till the regulations are changed to enforce the demarcations you speak of, bonuses will continue.
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by 4Play(m): 1:34am On Jan 10, 2010
debosky:

These hedge funds will be part owned by banks or some other arrangement, so it'll simply be moving the problem to a different location waiting to happen. Trading, while risky is still an integral part of how markets work. I don't buy the idea that simply because the banks are currently guaranteed by the Govt that they should be prevented from doing what they do.

Each hedgie is unique but most are not owned by banks. The idea is not to eradicate the problem but to move it somewhere else, the shadow banking system, where its negative effects are contained. It's one thing if MAN Group implodes, it's quite another where RBS implodes. In the latter, the taxpayer foots the bill.

Trading is not an integral of a banking system. The question is not whether to engage in risky trading but whether banks should engage in risky trading.

In any case, the govt expects to make a profit from their investments in the banks - how on earth do they think that will happen if they prevent the banks from participating in these risky (but highly profitable) activities? Counter productive if you ask me.

The gross losses of the implosion of banking system in '08 far exceeds the expected profits the Govt will make from their stakes in the various banks.

Banking is a lot more than that - you can't possibly draw those distinctions at the moment, so till the regulations are changed to enforce the demarcations you speak of, bonuses will continue.

Banking has always been essentially as I described it. This stampede into casino banking is a relatively new thing. The world was doing quite well with traditional banking.
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by No2Atheism(m): 3:22am On Jan 10, 2010
4 Play:

Each hedgie is unique but most are not owned by banks. The idea is not to eradicate the problem but to move it somewhere else, the shadow banking system, where its negative effects are contained. It's one thing if MAN Group implodes, it's quite another where RBS implodes. In the latter, the taxpayer foots the bill.

Trading is not an integral of a banking system. The question is not whether to engage in risky trading but whether banks should engage in risky trading.

The gross losses of the implosion of banking system in '08 far exceeds the expected profits the Govt will make from their stakes in the various banks.

Banking has always been essentially as I described it. This stampede into casino banking is a relatively new thing. The world was doing quite well with traditional banking.




Exactly it is Casino banking . . . hence why they are able to pay Investment Bankers outrageous salaries and bonuses simply for shifting other people's money around and gambling with it . . . while the public is made to take the loss when it happens.

Thats why personally, I don't envy investment bankers cus in reality its like selling your soul cus u know u are playing with the live savings of many . . .

My suspicion is that the reason no one seems to be capable of explaining the so called "Complex Products" is because its an open secret that it is gambling . . .hence no one wants to rock the boat . . .
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by 4Play(m): 11:11pm On Jan 21, 2010
Obama has today proposed restrictions on banks engaging in prop trading, owning hedge funds and private equity firms. About time the riskier aspects of modern banking is hived off so that banks can concentrate on what they do best. Shame he announced on a day I was holding Barclays shares.
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by Sagamite(m): 2:37am On Feb 27, 2010
Just reading this article in the Financial times, they gave exactly my point on the dichotomy of values that exist between Banking/High Finance and Medicine/Law. It seems MBA professors have also spotted this and are working on it.

http://www.ft.com/cms/s/0/2978dc3c-f880-11de-beb8-00144feab49a.html

[size=18pt]Risk and returns of the MBA diploma[/size]

Those who can, do; those who can’t, teach. But in business and finance it turned out that many of those who did, couldn’t. That has left their teachers – the world’s business schools, especially the most prestigious ones – under fire.

Business schools count many protagonists of the crisis among their alumni, and untold numbers of financial sector foot soldiers sport MBA diplomas. But however righteous the public’s ire over the financial meltdown, is it not a little unfair to direct it at the schools that taught the financiers?

The crisis was a systemic event – the aggregate result of individual choices, not single acts of wrongdoing. Bernard Madoff’s fraud and Raj Rajaratnam’s alleged insider trading did not cause the financial collapse. If it is too simple to blame the crisis on individuals, it seems a stretch to tarnish their schools with guilt by association. (Besides, Mr Madoff never went to business school.)

Still, the spotlight on management schools reveals a dilemma. Do they, like schools of law or medicine, pass on a body of knowledge and know-how defining a profession? Or do they, in a world of rampant degree inflation, merely offer the latest must-have qualification, valued only for proving its holders smart enough to get in but not for anything gained (except contacts) by the time they get out?

The former would be preferable – including for the schools themselves, which would much rather admit that they have done their job badly than suggest that they have no influence on how business and finance are practised.

So as the Financial Times reports on Monday, business schools have started to do some soul-searching, asking what responsibility they have for what happened and how to reform their curricula. About time too. In two important ways business schools have exacerbated what is wrong in business and finance. They can do better if they want to be shapers of the commercial world, not just expensive talent screening devices.

First, business schools – the academic homes to many pre-eminent finance theorists – were crucial in spreading the type of financial analysis that made derivatives and securitised products look too safe to rating agencies, investors, regulators, and the products’ creators.

The good news is that finance professors are well placed to improve on existing models, and many schools are already busy introducing or updating courses on finance. But this can only be part of the effort. Modelling risk better does not by itself alter the incentive to take on too much of it. Business schools must use their financial expertise to actively help investors and regulators, not just financial companies – at least if they aspire to a public role.

Second, however, business schools have failed to articulate what such a role should be for managers. Failing to make business students absorb a “shareholder value” mindset is not the real problem. It is that many managers care rather less about investors than about themselves. Business schools have not (to put it mildly) damped managers’ inflated sense of entitlement.

Many schools are now boosting ethics courses. A dose of moral philosophy could do some good – but lip service is both more likely and worse than no course at all: students quickly see through fig leaves. Students’ own initiatives, such as the “MBA oath” (based on the Hippocratic oath), are more promising. They deserve support.

Yet copying the trappings of professions like law or medicine will do little. The managerial class, if it exists as such, does not have an internalised set of common values of which business schools can be the custodians. But the schools should help managers to value ethical conduct. A good start would be a greater willingness to criticise their students’ conduct – even after they graduate.
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by Sagamite(m): 10:25pm On Mar 17, 2010
OK, guys, I am beginning to think I am a genius with the insightfulness of my opinions.

[size=4pt]Actually, I know I am. But I am just being humble, you know, so you guys don't think for a second that I am arrogant when I am obviously not. *Straight face*  grin  grin grin[/size]

I find a few more brilliant men making points similar to my points:

Former US Federal Reserve chairman, Paul Volcker, says financial innovations are worthless. (scam)

FSA chairman Lord Turner's comments that banks are "socially useless". (lack of social responsibility)

http://www.telegraph.co.uk/finance/economics/6764177/Ex-Fed-chief-Paul-Volckers-telling-words-on-derivatives-industry.html

[size=18pt]Ex-Fed chief Paul Volcker's 'telling' words on derivatives industry[/size]

Paul Volcker, the chairman of President Obama's Economic Recovery Advisory Board, stunned a business conference in Sussex yesterday, saying there is "little evidence innovation in financial markets has had a visible effect on the productivities of the economy".

The former US Federal Reserve chairman told an audience that included some of the world's most senior financiers that their industry's "single most important" contribution in the last 25 years has been automatic telling machines, which he said had at least proved "useful".

Echoing FSA chairman Lord Turner's comments that banks are "socially useless", Mr Volcker told delegates who had been discussing how to rebuild the financial system to "wake up". He said credit default swaps and collateralised debt obligations had taken the economy "right to the brink of disaster" and added that the economy had grown at "greater rates of speed" during the 1960s without such products.

When one stunned audience member suggested that Mr Volcker did not really mean bond markets and securitisations had contributed "nothing at all", he replied: "You can innovate as much as you like, but do it within a structure that doesn't put the whole economy at risk."

He said he agreed with George Soros, the billionaire investor, who said investment banks must stick to serving clients and "proprietary trading should be pushed out of investment banks and to hedge funds where they belong".

Mr Volcker argued that banks did have a vital role to play as holders of deposits and providers of credit. This importance meant it was correct that they should be "regulated on one side and protected on the other". He said riskier financial activities should be limited to hedge funds to whom society could say: "If you fail, fail. I'm not going to help you. Your stock is gone, creditors are at risk, but no one else is affected."
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by Sagamite(m): 4:10am On Apr 28, 2010
Another of my earlier assessment being vindicated:

Sagamite:

The industry is very complex (by design and naturally) that it is hard to monitor it by the government without huge investment of tight and limited public funds that would be infelicitous I just wan blow grammar na, ki lo de  grin and for their customers to understand and challenge effectively or confidently (as their middlemen would not fight the system on their behalf). And spurred by the greed of man, these western bankers have taken people for a ride as there is no ounce of social responsibility culture embedded in their ways of working, rather severe avarice is the pervading norm. One aspect for potential deep analysis for the MBA thesis for awon MBAers  cheesy

This zero-sum gaming was the reason I kept saying "real money" and "chimeras" earlier and potential personal gains was why I warned, in another thread earlier this year, that Lagos State government engage very intelligent people not Obesere civil servants when working in partnership with bankers on project financing the infrastructural revolution of the state through PPPs.

When I hear of some banker being paid hundreds of millions at a bank or hedge fund, I don't think talent, I think "insider trading".  undecided That is hundreds of millions, not the ones that make a few milions

By this story of a Hedge funder earning $1Bn (earned ko, yahoo yahoo ni)

http://topics.nytimes.com/top/reference/timestopics/people/p/john_paulson/index.html

More than perhaps any other investor, John Paulson has been lauded for his foresight in predicting a quick and painful end to the mortgage boom. His prescience made him billions and transformed him from a relative nobody into something of a celebrity on Wall Street and in Washington.

But now his bold bets have thrust Mr. Paulson into an uncomfortable spotlight. On April 16, 2010, the Securities and Exchange Commission filed a civil fraud lawsuit against Goldman Sachs for neglecting to tell its customers that mortgage investments they were buying consisted of pools of dubious loans that Mr. Paulson had selected because they were highly likely to fail.

By betting against the pool of questionable mortgage bonds, Mr. Paulson made $1 billion when they collapsed just a few months later, the S.E.C. said.

Mr. Paulson was not named as a defendant in the S.E.C. suit, but his role in devising the instrument that caused $1 billion in losses for Goldman's customers is detailed in the complaint.

Mr. Paulson was fourth on the 2009 annual ranking of top earners in the hedge fund industry by AR: Absolute Return+Alpha magazine. He came in second in 2008 with reported gains of $2 billion.

And Paulson & Company's performance in 2007 was estimated to be the best of any hedge fund, according to several publications. According to Institutional Investor's Alpha magazine, Mr. Paulson himself made $3.7 billion, at the time considered the richest bounty in Wall Street history.

And Mr. Paulson himself was a relative unknown. A Queens-born graduate of New York University and the Harvard Business School, Mr. Paulson went to Wall Street in the early 1980s just as the biggest bull market in history was starting. He joined Bear Stearns in 1984 as a junior executive in the investment banking unit.

Ten years later, he started his hedge fund with $2 million of his own capital.

Mr. Paulson began betting against subprime mortgages as early as 2006, setting up two funds focused for that purpose. At the time, the bet seemed highly contrarian: Big firms like Merrill Lynch and Citigroup were gorging on enormous profits by packaging and trading blocks of risky home loans.

But by the time the housing market began to slump in 2007, Mr. Paulson’s pessimism seemed well founded. The housing crisis led to a near-cratering of the mortgage market, forcing hundreds of billions of dollars in losses at major investment banks.

And in a surprising twist, Paulson & Company was reported in January 2008 to have hired Alan D. Greenspan, the former Federal Reserve chairman, as an adviser.

Plainly put: FRAUD!!!
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by Sagamite(m): 8:53pm On Feb 26, 2011
[size=18pt]Investment banks: how much pay is too much? [/size]

Investment banks have paid their staff nearly three times more in pay and bonuses than they have made in profits for their shareholders over the past five years, according to analysis by Financial News – raising the question over the fair distribution of rewards between employees and owners in the investment banking industry.

A sample of eight of the biggest investment banks and investment banking divisions that publish comparable figures paid out $311bn in compensation and benefits between the beginning of 2006 and the end of the third quarter this year. This “payout multiple” was 2.6 times the $120.4bn they made in pre-tax profits over the same period for their shareholders – who provide the capital for, and shoulder the risk of, the business.

While few of the banks disclose net profits for their investment banking divisions, assuming an average tax rate of 35%, the investment banks made around $84bn in net profits for their shareholders over the past five years. This means that employees have received nearly four times the profits theoretically available to their shareholders.

The disparity between how much staff get paid and how much shareholders or parent banks make in profits is likely to fuel the debate over bonuses and levels of remuneration in the securities industry at a sensitive time.

While the analysis of compensation relative to pre-tax profits is crude, it gives an indication of whether high levels of remuneration in the industry are matched by high levels of profits.

One industry analyst said: “It is obvious that the balance between what employees have received and what shareholders have received has not been right for some time”. He said one reason for this is that many products and businesses have turned out to be less profitable than had previously been thought and, as a result, staff had earned more than they should have done in the past decade.

UBS Investment Bank was the most generous to its staff relative to its parent group and shareholders, paying out $34.1bn since the beginning of 2006, despite making cumulative pre-tax losses of $44.8bn over the same period. (The figures were converted from Swiss francs into dollars at the prevailing exchange rate for each year).

The investment bank at Credit Suisse was the next most generous to its staff relative to shareholders, paying them $37bn over the period – nearly nine times the cumulative $4.2bn it made in pre-tax profits over the period (although in local currency this ratio was 7.5 times). Both UBS and Credit Suisse declined to comment on the numbers, but pointed to the changes they had made to their business model and to compensation structures in the past two years.

• Goldman Sachs beats the Street

Goldman Sachs was one of the most generous banks to its shareholders. It paid out $76.9bn in compensation and benefits over the period, just 1.2 times the $63.7bn it made in pre-tax profits and less than double the $42.8bn it made in net profits. Its rival Morgan Stanley paid staff in its institutional securities division around half what Goldman Sachs paid its employees, but made less than one fifth of the pre-tax profits made by its Wall Street rival over the same period. Morgan Stanley paid out $38.1bn in compensation, which amounted to 3.3 times its pre-tax profits.

The most conservative bank in the sample was Royal Bank of Scotland, whose global banking and markets business has paid staff £10.9bn over the period, or just 80% of the £13.9bn it has made in pre-tax profits since the beginning of 2006.

Traditionally, investment banks express compensation as a percentage of net revenues, known as the compensation ratio, which, across the eight banks, averaged 49% over the period. Banks with high ratios of pay to profits relative to their peers might struggle to justify their remuneration policies to shareholders, according to investors. One senior investment banker said: “It is difficult to justify Goldman Sachs’ levels of pay if you are not delivering Goldman Sachs’ performance”.

• Hangover

The high levels of pay in investment banking relative to profits have angered some fund managers. Richard Greenwood, a senior analyst at UK fund management boutique Bedlam Asset Management – which has almost no holdings in banking stocks – said: “The amount of investment banking profits that goes to the bankers is partly a hangover from the days when they were partnerships. It is also a reflection of the superior position of the investment banks in relation to their shareholders. It’s not clear that bankers provide utility to match what they are paid. Could it change? If we get another crisis, then perhaps, otherwise I’d not expect much change.”

Neil Dwane, chief investment officer of RCM, an asset management subsidiary of German insurer Allianz, said: “Investment bankers’ remuneration makes it hard to own investment bank stocks, and for the last two and a half years we haven’t owned any banks.”

Dwane said banks were paying shareholders “1970s style dividends” while paying their staff “remuneration from the 2000s”. He said: “Many bank have doubled everyone’s salary – how is that good management practice? It’s insane. No other business would double its fixed costs.”

• Over the cycle

The sample covers the peak of the bull market in 2006 and 2007, the crisis in 2008, the bounceback in financial markets in 2009 and the volatile year so far in 2010. All the banks were given the opportunity to comment on or correct the numbers.

Over the past five years, the investment banks in the sample have struggled to be sustainably profitable. The analysis shows that Goldman Sachs has made an aggregate net return on equity at group level since the beginning of 2006 of 20% with pre-tax margins of 35%. JP Morgan, the next most profitable bank with profits of $25bn over the period and margins of 26%, managed a 13% return on equity.

Deutsche Bank’s corporate and investment banking business made posted margins of 16% over the period but an estimated aggregate return on equity of 10%, almost certainly below its cost of capital.

Strip out the huge losses made by UBS through the financial crisis from the sample and the seven remaining banks paid their staff 1.7 times what they made in pre-tax profits. Strip out 2008 – a difficult year for all of the banks in which they made cumulative losses of more than $60bn – and the ratio across the sample between pay and profits is 1.5 times.

Other fund managers were more sanguine. Guy de Blonay, manager of Jupiter Asset Management’s Financial Opportunities fund, said of the way profits were split between bankers and shareholders: “Whether it’s fair has to be judged on a case-by-case basis. The trend towards paying more remuneration in shares rather than cash is aligning the interests of employees and shareholders.”

Neil Cumming, a fund manager running Psigma Asset Management’s UK equity income fund, said: “The remuneration policy of an individual company is for that company to sort out. If you as a shareholder disapprove, it’s something you’d sort out with management. The effect of the world’s governments’ and regulators’ concerted efforts in relation to remuneration has had the effect of raising investment bankers’ basic pay, which as a shareholder has increased fixed costs, which will reduce profits in tough years.”

The eight banks in the sample were Goldman Sachs, the investment banking divisions of Credit Suisse, Morgan Stanley and UBS, and corporate and investment banking divisions at Barclays, Deutsche Bank and RBS. All of these banks publish figures for compensation at a divisional level. With Barclays Capital and Morgan Stanley, Financial News made an estimate of compensation for 2006 and 2007 based on averages across the rest of the sample.

http://www.efinancialnews.com/story/2010-12-06/how-much-pay-is-too-much

I said it all here:

Risk https://www.nairaland.com/nigeria/topic-364347.0.html#msg5085119

Earnings https://www.nairaland.com/nigeria/topic-364347.0.html#msg5085634
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by candylips(m): 12:08am On Mar 25, 2011
The guys earning these bonus are typicaly in managment and traders with P&L.

Very greedy people. Imagine some of these banks layed off a lot of people last year yet one executive decides to pocket 2.5 million pounds for himself
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by jdvh2002: 2:44pm On May 16, 2011
Hello friends , I'm 26 peruvian student who is currently living in Italy, I was reading many post about Oil& Gas sector, and I wonder I can ask you for advices , I've received an offer from Imperial College for Msc in Petroleum Engineering , but I'm working in Italy as a process engineer in Basf , I don't know if is better to go to London , I love oil&gas sector , but I don't know if then is easy to get a job as a reservoir engineering in the uk and it is worth (The fees are £23. 500), I've received a partial scolarship , However I'm afraid that I will spend there as minimun £ 15 000 , thanks for your response, friends.
Jhonatan
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by Sagamite(m): 7:51am On Mar 15, 2012
The problems with ethics in Finance I alluded to earlier is exposed in Goldman Sachs.

[size=18pt]Our toxic bank: It's morally bankrupt and calls clients 'muppets' says disgusted British-based Goldman Sachs executive as he walks out[/size]

Today is my last day at Goldman Sachs. After almost 12 years at the firm — first as a summer intern while at Stanford, then in New York for 10 years, and now in London — I believe I have worked here long enough to understand the trajectory of its culture, its people and its identity. And I can honestly say that the environment now is as toxic and destructive as I have ever seen it.

To put the problem in the simplest terms, the interests of the client continue to be sidelined in the way the firm operates and thinks about making money. Goldman Sachs is one of the world’s largest and most important investment banks and it is too integral to global finance to continue to act this way. The firm has veered so far from the place I joined right out of college that I can no longer in good conscience say that I identify with what it stands for.

It might sound surprising to a skeptical public, but culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years. It wasn’t just about making money; this alone will not sustain a firm for so long. It had something to do with pride and belief in the organization. I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years. I no longer have the pride, or the belief.

But this was not always the case. For more than a decade I recruited and mentored candidates through our grueling interview process. I was selected as one of 10 people (out of a firm of more than 30,000) to appear on our recruiting video, which is played on every college campus we visit around the world. In 2006 I managed the summer intern program in sales and trading in New York for the 80 college students who made the cut, out of the thousands who applied.

I knew it was time to leave when I realized I could no longer look students in the eye and tell them what a great place this was to work.

When the history books are written about Goldman Sachs, they may reflect that the current chief executive officer, Lloyd C. Blankfein, and the president, Gary D. Cohn, lost hold of the firm’s culture on their watch. I truly believe that this decline in the firm’s moral fiber represents the single most serious threat to its long-run survival.

Over the course of my career I have had the privilege of advising two of the largest hedge funds on the planet, five of the largest asset managers in the United States, and three of the most prominent sovereign wealth funds in the Middle East and Asia. My clients have a total asset base of more than a trillion dollars. I have always taken a lot of pride in advising my clients to do what I believe is right for them, even if it means less money for the firm. This view is becoming increasingly unpopular at Goldman Sachs. Another sign that it was time to leave.

How did we get here? The firm changed the way it thought about leadership. Leadership used to be about ideas, setting an example and doing the right thing. Today, if you make enough money for the firm (and are not currently an ax murderer) you will be promoted into a position of influence.

What are three quick ways to become a leader? a) Execute on the firm’s “axes,” which is Goldman-speak for persuading your clients to invest in the stocks or other products that we are trying to get rid of because they are not seen as having a lot of potential profit. b) “Hunt Elephants.” In English: get your clients — some of whom are sophisticated, and some of whom aren’t — to trade whatever will bring the biggest profit to Goldman. Call me old-fashioned, but I don’t like selling my clients a product that is wrong for them. c) Find yourself sitting in a seat where your job is to trade any illiquid, opaque product with a three-letter acronym.

Today, many of these leaders display a Goldman Sachs culture quotient of exactly zero percent. I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them. If you were an alien from Mars and sat in on one of these meetings, you would believe that a client’s success or progress was not part of the thought process at all.

It makes me ill how callously people talk about ripping their clients off. Over the last 12 months I have seen five different managing directors refer to their own clients as “muppets,” sometimes over internal e-mail. Even after the S.E.C., Fabulous Fab, Abacus, God’s work, Carl Levin, Vampire Squids? No humility? I mean, come on. Integrity? It is eroding. I don’t know of any illegal behavior, but will people push the envelope and pitch lucrative and complicated products to clients even if they are not the simplest investments or the ones most directly aligned with the client’s goals? Absolutely. Every day, in fact.

It astounds me how little senior management gets a basic truth: If clients don’t trust you they will eventually stop doing business with you. It doesn’t matter how smart you are.

These days, the most common question I get from junior analysts about derivatives is, “How much money did we make off the client?” It bothers me every time I hear it, because it is a clear reflection of what they are observing from their leaders about the way they should behave. Now project 10 years into the future: You don’t have to be a rocket scientist to figure out that the junior analyst sitting quietly in the corner of the room hearing about “muppets,” “ripping eyeballs out” and “getting paid” doesn’t exactly turn into a model citizen.

When I was a first-year analyst I didn’t know where the bathroom was, or how to tie my shoelaces. I was taught to be concerned with learning the ropes, finding out what a derivative was, understanding finance, getting to know our clients and what motivated them, learning how they defined success and what we could do to help them get there.

My proudest moments in life — getting a full scholarship to go from South Africa to Stanford University, being selected as a Rhodes Scholar national finalist, winning a bronze medal for table tennis at the Maccabiah Games in Israel, known as the Jewish Olympics — have all come through hard work, with no shortcuts. Goldman Sachs today has become too much about shortcuts and not enough about achievement. It just doesn’t feel right to me anymore.

I hope this can be a wake-up call to the board of directors. Make the client the focal point of your business again. Without clients you will not make money. In fact, you will not exist. Weed out the morally bankrupt people, no matter how much money they make for the firm. And get the culture right again, so people want to work here for the right reasons. People who care only about making money will not sustain this firm — or the trust of its clients — for very much longer.

Source: The New York Times
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by Blessedd(m): 6:23pm On May 26, 2012
No, not at all. They shouldn't be rewarded for their greed.
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by Sagamite(m): 7:37pm On Jun 29, 2012
I am watching the news in the UK this very second and the Economics Nobel laureate, Joseph Stiglitz, is saying exactly what I have been saying for years:

The banks are not being run in the interest of social values. They are not even run in the interest of Shareholders. They are being run in the interst of the Bank Managers.

Exactly what I have been saying.

Society will never allow Doctors or Lawyers to operate like that. Bankers are not given or guided by any social or moral responsibilities.
Re: Do Bankers Really Deserve Their Multi-million Pound Pays? by eddybanty(m): 10:46pm On Jun 24, 2015
No. They don't.

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