Bankers bonuses - Osborne Stands Alone

[Uptowngirl]

I might be wrong on this, but isn't the financial industry still propping up Britain's finances in a way that doesn't apply to the rest of Europe?

 

I'm open to persuasion on this one, if it's true I wish it wasn't so, but maybe we need to be careful what we wish for...

 

That just about sums it up. 10% plus of the UK's earnings come from financial dealing. It would be very easy for people like this to move to New York or Singapore.

 

http://www.guardian.co.uk/business/2012/may/01/ed-balls-brother-57m-pimco

 

 

Ed Balls's brother nets part of £57m Pimco wage packet

 

Andrew, brother of shadow chancellor, and five others share pay as revealed in documents filed by bond investment firm.

Andrew Balls, the brother of shadow chancellor Ed, has shared £57m in pay with six other directors of the European arm of Pimco, the world's largest bond investor.

 

The pay packages included £29.9m earned by the fund manager's highest paid director, which dwarfs the $23m (£14m) that Jamie Dimon, chief executive of JP Morgan, received in 2011. Dimon has been billed as Wall Street's highest paid banker. The identity of which of the seven is the Pimco top earner is undisclosed.

 

The huge Pimco rewards are revealed in documents filed with Companies House, as the controversy over City and executive pay gains momentum following last minute alterations by Barclays to its bonus plan and a wave of protests at companies as diverse as Smith & Nephew and Capital Shopping Centres.

 

Elsewhere, advertising group WPP is facing a row with its investors after handing its founder and chief executive, Sir Martin Sorrell, a 30% rise in his salary to £1.3m, while insurer Aviva has attempted to avert a rebellion at its annual general meeting on Thursday by announcing that chief executive Andrew Moss will not accept the 4.8% rise that would have pushed his £960,000 salary above £1m.

 

Pimco is based in California and is owned by German financial services giant Allianz; it manages $1.4tn on behalf of pension funds, corporate treasury departments and financial intermediaries - a massive sum that equates to Spain's gross domestic product. The company has grown in size and significance during the sovereign debt crisis as high-deficit European countries desperately need investors to buy their bonds. Pimco has more bond investors than anybody else.

 

 

 

Do these people need to be in London at all?

 

 

http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CEUQFjAC&url=http%3A%2F%2Fwww.parliament.uk%2Fbriefing-papers%2Fsn06193.pdf&ei=OFs3UfbfBoLTPKmSgKgL&usg=AFQjCNEZiCnQQfOfYGl83B22ondDPz4_iw&bvm=bv.43287494,d.ZWU

 

In 2011, financial and insurance services contributed £125.4 billion in gross value added (GVA) to the UK economy, 9.4% of the UK’s total GVA. London accounted for 45.8% of the total financial and insurance sector GVA in the UK in 2009. The sector’s contribution to UK jobs is around 3.6%. Trade in financial services makes up a substantial proportion of the UK’s trade surplus in services. In 2010-11 the banking sector alone contributed £21.0 billion to UK tax receipts in corporation tax, income tax and national insurance.

[alchemist]

In a word, yes. This will cost the UK a fortune if it goes through

 

You mean apart from the massive fortune the creeps have ALREADY cost us?

 

---------- Post added 06-03-2013 at 15:22 ----------

 

But unfortunately, they know that they can get ten times that amount elsewhere.

 

If they KNOW that, why are they not there already? Is it perchance merely just an empty bluff?

[Uptowngirl]

 

If they KNOW that, why are they not there already? Is it perchance merely just an empty bluff?

 

I think the move is well underway.

 

http://www.economist.com/node/18586804

 

 

Singapore's financial rise

Going swimmingly

The city-state has a handy habit of taking advantage of financial upheaval

 

 

IN THE 1950s the Bank of China could use 20-year-old architectural designs for its Singapore headquarters near the central post office. From buildings to businesses, things moved slowly in the city-state. Today the picturesque old Bank of China building stands out because little else in Singapore's financial world stays the same.

 

One change is physical. Citigroup has moved its headquarters from the same district as Bank of China, first to Shenton Way, which now serves as one financial centre, and then to another, known as Suntec City. It will soon join Standard Chartered at a third site, Marina Bay, which has been built on reclaimed land. A fourth centre for back-office workers is opening up near the (excellent) airport. In an area near Chinatown once known for brothels, converted shops now house investment firms, lawyers and the like.

 

Perhaps the best measure of change is employment. In 1970 Citi could fit every last member of staff, perhaps 100 or so, on a boat for an advertising image. Michael Zink, Citi's Singapore head, keeps a copy of the ad near his desk as he oversees 9,400 workers and counting.

 

The scale of the transformation has been enough to propel Singapore into the ranks of the world's leading financial centres. As places like London and Switzerland debate whether to welcome bankers or punish them, Singapore has started its own special government school to train private bankers and leased a mansion once used by the British armed forces to UBS to do the same. Credit Suisse has plans for something similar.

 

Demand for capable people is unquenchable. More than 2,880 financial institutions have registered with Singapore's monetary authority for one activity or another. They include the usual big names as well as a vast array of smaller firms.

 

One clear thread in Singapore's rise has been its ability to take consistent advantage of global upheavals, beginning in 1971 when America de-linked the dollar from gold. Singapore was quick to grasp this opportunity to create a regional centre for foreign exchange, says Gerard Lee, the chief executive of Lion Global Investors and a former executive at GIC, Singapore's sovereign-wealth fund. Things are no different today: Singapore is positioning itself to grab a chunk of offshore trading in yuan as the Chinese currency gradually starts to internationalise.

 

Ancillary businesses such as derivatives have thrived. One of the large banks says more than half of Asia's over-the-counter derivative volume in commodities passes through Singapore. According to Barclays Capital, the trading volume of foreign-exchange-related products has jumped 29-fold since 2005 in retail markets alone, and that of interest-rate-related products 43 times.

[L00b]

Some years ago, I tanced with UOB (Singapore's 2nd largest bank at the time, maybe still) in the Singapore High Court, then Court of Appeal in a patent infringement case. UOB lost both proceedings. First software patent ever litigated in SG, so I'm not a little proud about that and the wins (including the further win in proceedings started in 2010 against another SG infringer, DBS, well after I left Ireland but won on the same tactic/submissions I'd left on the file, by the look of things). The "double-digit $ millions" kind of win.

 

Low and behold, within weeks of the judgement, I had a couple of large Singapore firms (in my area of work) approaching me for a job move, on the quiet. Turned them down due to familial and formal reasons, but was impressed with their opportunism and resourcefulness (my name did not appear anywhere in the judgement or the Court transcripts, I was remote-controlling local Counsel for the patentee-plaintiff from Ireland...but I know for a fact Counsel did not blab, so God only knows how they'd found me).

[green]

That just about sums it up. 10% plus of the UK's earnings come from financial dealing. It would be very easy for people like this to move to New York or Singapore.

 

http://www.guardian.co.uk/business/2012/may/01/ed-balls-brother-57m-pimco

 

 

Ed Balls's brother nets part of £57m Pimco wage packet

 

Andrew, brother of shadow chancellor, and five others share pay as revealed in documents filed by bond investment firm.

Andrew Balls, the brother of shadow chancellor Ed, has shared £57m in pay with six other directors of the European arm of Pimco, the world's largest bond investor.

 

The pay packages included £29.9m earned by the fund manager's highest paid director, which dwarfs the $23m (£14m) that Jamie Dimon, chief executive of JP Morgan, received in 2011. Dimon has been billed as Wall Street's highest paid banker. The identity of which of the seven is the Pimco top earner is undisclosed.

 

The huge Pimco rewards are revealed in documents filed with Companies House, as the controversy over City and executive pay gains momentum following last minute alterations by Barclays to its bonus plan and a wave of protests at companies as diverse as Smith & Nephew and Capital Shopping Centres.

 

Elsewhere, advertising group WPP is facing a row with its investors after handing its founder and chief executive, Sir Martin Sorrell, a 30% rise in his salary to £1.3m, while insurer Aviva has attempted to avert a rebellion at its annual general meeting on Thursday by announcing that chief executive Andrew Moss will not accept the 4.8% rise that would have pushed his £960,000 salary above £1m.

 

Pimco is based in California and is owned by German financial services giant Allianz; it manages $1.4tn on behalf of pension funds, corporate treasury departments and financial intermediaries - a massive sum that equates to Spain's gross domestic product. The company has grown in size and significance during the sovereign debt crisis as high-deficit European countries desperately need investors to buy their bonds. Pimco has more bond investors than anybody else.

 

 

 

Do these people need to be in London at all?

 

 

http://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=3&ved=0CEUQFjAC&url=http%3A%2F%2Fwww.parliament.uk%2Fbriefing-papers%2Fsn06193.pdf&ei=OFs3UfbfBoLTPKmSgKgL&usg=AFQjCNEZiCnQQfOfYGl83B22ondDPz4_iw&bvm=bv.43287494,d.ZWU

 

In 2011, financial and insurance services contributed £125.4 billion in gross value added (GVA) to the UK economy, 9.4% of the UK’s total GVA. London accounted for 45.8% of the total financial and insurance sector GVA in the UK in 2009. The sector’s contribution to UK jobs is around 3.6%. Trade in financial services makes up a substantial proportion of the UK’s trade surplus in services. In 2010-11 the banking sector alone contributed £21.0 billion to UK tax receipts in corporation tax, income tax and national insurance.

 

 

Firstly, i heard on Daily Politics that it doesnt matter if someone moves abroad, the rule still stands for any employee that the group have headquartered in Europe, so moving really isnt going to make any difference.

 

Secondly, it is precisely because we are the financial centre and we have mis managed them badly (think of our banksters and libor for one) for far too long that we need to rein their pay in. They wont. The regulators wont (what regulators!). Our Govt wont. The EU for all its fault, have and will.

 

Thirdly, do not DARE start the corporation tax argument. They dont pay it. They create hundreds of schemes so their clients dont pay it. It costs us BILLIONS.

 

RBS & Lloyds are still costing us.

[Uptowngirl]

Firstly, i heard on Daily Politics that it doesnt matter if someone moves abroad, the rule still stands for any employee that the group have headquartered in Europe, so moving really isnt going to make any difference.

 

Secondly, it is precisely because we are the financial centre and we have mis managed them badly (think of our banksters and libor for one) for far too long that we need to rein their pay in. They wont. The regulators wont (what regulators!). Our Govt wont. The EU for all its fault, have and will.

 

Thirdly, do not DARE start the corporation tax argument. They dont pay it. They create hundreds of schemes so their clients dont pay it. It costs us BILLIONS.

 

RBS & Lloyds are still costing us.

 

I think you are missing the point. It isn't so much a question of individuals moving to banking centres outside Europe. It is a question of financial institutions moving complete with key staff. So there is less and less incentive for companies like HSBC (Hong Kong and Shanghai Banking Corporation) to base themselves in London.

So you like to imagine that a corportation is somehow obligated by these rules. The reality is that an international corporation can set up its head office pretty much where they feel they will get the maximum advantage.

 

As I posted earlier. "In 2011, financial and insurance services contributed £125.4 billion in gross value added (GVA) to the UK economy, 9.4% of the UK’s total GVA. London accounted for 45.8% of the total financial and insurance sector GVA in the UK in 2009. The sector’s contribution to UK jobs is around 3.6%. Trade in financial services makes up a substantial proportion of the UK’s trade surplus in services. In 2010-11 the banking sector alone contributed £21.0 billion to UK tax receipts in corporation tax, income tax and national insurance. " It wouldn't be difficult for the UK to loose a good deal of that business, revenue, tax and jobs. Singapore and other centres will welcome these institutions with open arms. So whilst it might suit some folk to carp on about a bankers bonus purely out of jealousy, whichever government is in power after the next election won't be able to increase spending if a large proportion of tax revenues has disappeared to the far east.

[TeaFan]

It's an utterly moronic policy if you basically say you can only have two times a salary as a bonus the salary will increase. stupid stupid stupid policy

 

Why won't they just pay a higher salary and a smaller bonus?

[Uptowngirl]

Why won't they just pay a higher salary and a smaller bonus?

 

They can and some undoubtably will. The idea of a bonus is to reward those who achieve. High salaries reward those who don't achieve results as well as those who do.

 

Manchester United could pay their top striker £10 million/year or £5 million plus £100,000 for every goal he scores. Which do you think gives the most encouragement to perform?

[TeaFan]

They can and some undoubtably will. The idea of a bonus is to reward those who achieve. High salaries reward those who don't achieve results as well as those who do.

 

Manchester United could pay their top striker £10 million/year or £5 million plus £100,000 for every goal he scores. Which do you think gives the most encouragement to perform?

 

I know which encourages people to take the greatest risks, almost sinking the economy in the process. You only have to look back 5 years to know this. Are peoples' memories really that short?

[Uptowngirl]

I know which encourages people to take the greatest risks, almost sinking the economy in the process. You only have to look back 5 years to know this. Are peoples' memories really that short?

 

That's down to regulation. I note that all the troubles in the UK banking sector came after control was taken away from the Bank of England and handed to Brown's new baby the FSA.

There is no problem with investment banks investing. That's what we are asking them to do. Part of the financial sector got into trouble by buying debt in an out of control spiral. That is what the regulator should have clamped down on. But that doesn't alter the fact that the financial sector never failed to contribute £10s of billions to the exchequer every year even at the height of the meltdown. Are we willing to kiss that goodbye?