Can someone explain this in simple language?:

[Gollom]

Royal Bank of Scotland (RBS) has announced losses for 2009 of £3.6bn ($5.5bn), after struggling with billions of pounds of bad loans. Despite the losses, the bank is set to announce it will pay bonuses of £1.3bn to its staff.

I pride myself on being pretty intelligent but the logic behind this totally escapes me.



And if all these bank people are leaving, where are they going given that most places are not exactly taking people on in droves. Anybody else reckon we are being conned in the extreme?

 

[horsesuitedfool]

Royal Bank of Scotland (RBS) has announced losses for 2009 of £3.6bn ($5.5bn), after struggling with billions of pounds of bad loans. Despite the losses, the bank is set to announce it will pay bonuses of £1.3bn to its staff.

I pride myself on being pretty intelligent but the logic behind this totally escapes me.

I suspect their new business teams have performed very well as have their investments which is who needs a bonus, these losses are from old bad debts being written off....

 

[Frank O' Phile]

Sorry Gollom, I've had a look but it's beyond me.

I'm sure someone will be along shortly with an answer.

 

[Gollom]

I suspect their new business teams have performed very well as have their investments which is who needs a bonus, these losses are from old bad debts being written off....

I get where the losses are coming from - but surely if a business makes a loss overall there is no money in the kitty for rises? At least that is my simple logic!!

 

[Gridlock]

"old bad debts" made up of sh** that was rated AAA by the credit agencies when it was put into tranches with actually-good stuff by... the banks?

The rich piss on us and the media tell us it's raining - c'est la vie.

Who decided it was a good idea to let retail banks have investment arms anyway, thus ensuring they could become "too big to fail"? Hmmm.....

They get their bonuses because the system worked, it did what it was designed to and the only ones displeased with the state of affairs are us serfs at the bottom, looking at swingeing funding cuts to trivial things like FE, healthcare and local government. Trident rolls on, I note - the "independent" deterrent we can't use without the US saying so...

 

[Frank O' Phile]

3.6 + 1.3 = 4.9 billion pounds

3.6 - 1.3 = 2.3 billion pounds

A difference of £2.6 billion.

BTW I'm not an accountant. Nor am I a customer of RBS thank goodness.

 

[HowardD]

I can kind of see why the government isn't making a huge issue of it.

They can publicly blame the banks for their lank of restraint and privately, of that £1.3bn bonus pot (If it's paid as cash), HMRC will take more 50% income tax, 12.8% employer NI, 1% employee NI.

And, then if the bonus exceeds £25,000 there is the Bank Bonus tax to contend with.

Potentially £500m+ in extra tax.

HD

 

[chiefski26]

horsesuitedfool
I suspect their new business teams have performed very well as have their investments which is who needs a bonus, these losses are from old bad debts being written off....

thats along the right lines yes new staff etc doing a good job these bonuses need to be paid to retain the staff etc,nothing wrong with it in my view.

 

[chiefski26]

lloyds report tomorrow and may well announce something along the lines of rbs today

 

[Chattonmill]

It is easy to create losses on a balance sheet and also have positive cash flow.
A lot depends on when they actually crystalise the losses they have sitting on their balance sheets.

 

[renault12ts]

Don't pay the bonuses = greater losses next year.

The chairman of RBS has stated that the losses would have been less if they had not lost talent to other banks paying bigger bonuses. If you were in the position of one of the talented you too would vote with your feet if another employer was going to pay you more.

It does not read well but it is a fact of life. An investment banker is incentivised by bonus, therefore it stands to reason he will try less hard if the bonus structure is lessened.

If I do my job as expected and achieve what I have to to earn bonus, then the profit or loss situation of my employer matters not.

 

[lxi]

Don't pay the bonuses = greater losses next year.

The chairman of RBS has stated that the losses would have been less if they had not lost talent to other banks paying bigger bonuses. If you were in the position of one of the talented you too would vote with your feet if another employer was going to pay you more.

.

Can't argue the logic of that - shame the philosophy is incomplete - by all means pay the bonuses to those that perform.

Fire those that don't.

Those that live by the sword etc - applies to most businesses in the real world - don't see why banks have the right to be any different

 

[wemorgan]

The chairman of RBS has stated that the losses would have been less if they had not lost talent to other banks paying bigger bonuses. If you were in the position of one of the talented you too would vote with your feet if another employer was going to pay you more.

Are we talking the same kind of talent as seen on X-factor?

 

[tonysurf]

So as shareholders no dividend then, suggest a motion of no confidence in the board at the next AGM

 

[HowardD]

Are we talking the same kind of talent as seen on X-factor?

I say RBS, you say Talent!!

 

[MangoMan]

I'm afraid there are powers here that the vast majority of us will never know, never mind understand, because if we did know there would be anarchy on a massive scale.

All I do know is that; The Banks control the Money, the Money controls the Government, the Government control the People. And most of the Money is controlled by a 'Handful' of people......

So really it's not worth worrying or talking about, because nothing will change, and if you think it's changed, you're thinking what they want you to think, because you only see and hear what they want you to see and hear.

Didn't you notice how most Major Governments all stood up and took notice when the Banks, (financial institutions) looks like they collapsed. It was just the Banks giving the Governments a 'Wake-Up' call to get them back in line for whatever reason we don't know of course.......

Smell the coffee......

 

[Lugy]

I'll bet I work far harder than these clowns and I work for a totally indepenent company. Why don't I get bonus?

 

[Gridlock]

We went to the wrong school, generally

 

[moonloops]

..or you didn't pay attention in school....

 

[davethemus]

I can kind of see why the government isn't making a huge issue of it.

They can publicly blame the banks for their lank of restraint and privately, of that £1.3bn bonus pot (If it's paid as cash), HMRC will take more 50% income tax, 12.8% employer NI, 1% employee NI.

And, then if the bonus exceeds £25,000 there is the Bank Bonus tax to contend with.

Potentially £500m+ in extra tax.

HD

that makes no sense.

it's tax payers money that is paying the bonuses. if we don't give them any bonuses we have £1.3 billion as opposed too the £500 from the £1.3 billion we gave them or am i missing something