Bankers'pay

amandstu

I don't want to sound too much like a simpleton and of course the following idea is not one I have given any real thought to as it doesn't seem practical or useful.

However I hear a lot about Bankers being overpaid (not the bankers you or I would meet in your local bank) and the rationale behind the criticism is that it is obscene and undeserved.

My own view on that is that ,as right as that may be , it doesn't follow that reducing the pay of highly paid bankers will have any effect on the failure of the banks to provide the businesses with loans (because ,I assume , the amount of money "earned" by these individuals pales into insignificance in comparison to the sums need to provide the aforesaid loans in the economy.

Am I right in this assumption?
Are the sums entirely disproportionate? (Is the turnover of a Bank many hundreds of times greater than its wage bill? Would "profit" be a more relevant yardstick than "turnover" ?)

Are the Bankers' "earnings" just an (extremely) annoying sideshow or are they in any way central to the problem of the failure of the banks?

Cookie_Monster

bankers earn no more than other senior people in other large business in different sectors and focusing on it is a complete misnomer. Turnover is rarely used as a measure of business in general or if it is it'll never be in isolation, there'll be profit measures, growth measures, sustainability measure etc all used to.

The essential argument is that these people are highly skilled and if they are not paid highly enough they will simply move to another company and skills, contacts, goodwill etc will be lost ultimately costing the business more to replace. The real question is is that really the case, both for banks, Irish bank or companies in general. The fact that some of these bankers managed to convince the government the bailout was required for all and that all banks should be saved kinda says they are worth what the earn, the fact that they got into the mess in the first place says they aren't

Dob74

amandstu wrote: »

I don't want to sound too much like a simpleton and of course the following idea is not one I have given any real thought to as it doesn't seem practical or useful.

However I hear a lot about Bankers being overpaid (not the bankers you or I would meet in your local bank) and the rationale behind the criticism is that it is obscene and undeserved.

My own view on that is that ,as right as that may be , it doesn't follow that reducing the pay of highly paid bankers will have any effect on the failure of the banks to provide the businesses with loans (because ,I assume , the amount of money "earned" by these individuals pales into insignificance in comparison to the sums need to provide the aforesaid loans in the economy.

Am I right in this assumption?
Are the sums entirely disproportionate? (Is the turnover of a Bank many hundreds of times greater than its wage bill? Would "profit" be a more relevant yardstick than "turnover" ?)

Are the Bankers' "earnings" just an (extremely) annoying sideshow or are they in any way central to the problem of the failure of the banks?

Why reward failure?
It's quite simple if we condone an action it Is more lightly to be repeated.

Not breaking up aib and boi is a major mistake. What government would allow only two major players dominate one industry. Aib has been bailed out twice since it was founded in the 60s.
My guess it's due another bailout in twenty years give past performance.

Another question is what politicians owe what bank. Politicians don't have to list there borrowings. Given our libel laws individuals can't be named and shamed as well.

JustinDee

The problem is bonuses, not so much pay, as bonuses are supposed to be performance related.

A director's role in an organisation as important as a bank is bound to involve a high basic salary, as with any other similar organisation.

shedweller

JustinDee wrote: »

The problem is bonuses, not so much pay, as bonuses are supposed to be performance related.

A director's role in an organisation as important as a bank is bound to involve a high basic salary, as with any other similar organisation.

Performance for the bank, right?

antoobrien

shedweller wrote: »

Performance for the bank, right?

If the bank hits its targets then yes. Those targets don't have to include making a profit, they do have to include metrics that improve the long and short term financial stability of the bank.

Lower than expected losses being regarded as "good" performance is something the tech industry sees a lot with M&A. When companies merge customers often get poached by competition - if fewer customers than is forecast are lost, the the people involved deserve credit & reward for doing their part for the company. The same applies to the banks regardless of the optics.

And lets face, we can't (and never could) let any of AIB, BOI or IP go under - it was never a realistic option. So if we want to turn the banks around and get back to business practices that support the long term health of the banks we need to hire the right people and pay them enough.