UK
The virtues (or not) of working for a part-nationalised bank
9 October 2008
Now that bankers at RBS, Barclays Capital and possibly HSBC are all en route to becoming public-sector employees, what are the implications for their job security and compensation?
Given that the government won’t have shareholder voting rights in the banks it’s recapitalising, it’s not going to be telling banks to put staff into early retirement and pay them a state pension. The only upside for job security is that the banks involved won’t be going into administration any time soon – not that this was ever really an option anyway.
Instead, the real impact of public cash is likely to be felt in bankers’ pockets. There are strings attached, and one of them is hooked onto limits on executive pay. The FSA is already promising to create a new code of conduct governing pay and bonuses.
Richard Everett, former head of the legal team at the FSA and a partner at law firm LG, says the FSA’s pay restrictions are likely to apply to traders, not just board members. He also says the FSA’s intervention is likely to take the form of high-level suggestions rather than specific dictates forbidding traders to earn more than £100k.
Despite this, it would clearly be bad PR for organisations that are taking cash from taxpayers to be seen paying big bonuses to bankers – even if they’re in areas that still make money.
A commodities trader at one of the banks involved says he wasn’t holding out much hope for bonuses this year anyway. “A lot of the impact of this nationalisation will depend on the terms of the deal, and they haven’t been very well drawn out yet.”
The FSA is an absolute joke. They, the bankers themselves and credit rating agencies are all to blame for this malaise. If a individual falls foul of the FSMA 200 the FSA will come down on them like a tonne of bricks. However when a bank in the case of the credit crisis has been "misleading" the market for years as to their capital adequacy is then part-Nationalised by a feeble government who with a chancellor appoints the FSA's Chairman, they do nothing except give them a slap on the wrist and bail them out. Why not let the tax-payer at these people within the banks, credit rating agencies and the FSA and see what the result is. It wouldn't be a slap on the wrist, I would break some of their arms. The FSA has really proved itself to be a completely limp wristed tool of the government. A reminder of the first Chancellor to appoint the Chairman, messr Brown and the current incumbent his darling boy with the badger style two tone eyebrows and shock of balding white hair messr Darling. Would anyone person from the afore mentioned institutions really fear someone with the name Hector or Sants. Lets get real. Question why are the likes of Fred Goodwin still in a job?
Stefannie 09 Oct 2008
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