The Guardian has reported that:
Britain's biggest bank, HSBC, has inflamed the row over City pay by awarding allowances to hundreds of its top staff, enabling them to avoid the EU bonus cap.
HSBC is the first UK bank to reveal how it will side-step the restriction on bonuses imposed by Brussels. It is [for example] awarding its chief executive, Stuart Gulliver, a £1.7m "fixed pay allowance" on top of his £1.2m salary, which will stop his pay from falling as a result of the restriction on bonuses imposed by Brussels.
It did this whilst disclosing that 239 bankers were paid more than £1 million last year.
I think that there is only one appropriate description of such behaviour that is designed to flagrantly breach the intent of the law, and that is to say the organisation undertaking them is institutionally corrupt.
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Institutionally corrupt = Banking and finance.
Institutionally corrupt = Politics.
These are the same people who are now going to invest [sic] the mandatory pension contributions of all…..
As I watched my pension plan increase by just enough to pay the charges, I considered the wisdom of allowing unconvicted, and unconvictable crooks access to large amounts of money!
¨Just in case you hadn’t noticed recently, the City and its banks have been continuing to live down to their shabby reputations and men like these represent but the visible tip of an iceberg-sized problem of alleged criminogenisis within the Square Mile¨
http://rowans-blog.blogspot.co.uk/
I realised HSBC was deeply dodgy when they were caught helping the Sinaloa cartel wash their loot. The ‘bonuses’ are, if not a sideshow, simply not in the same order of criminality.
Accepted
I have been referring to HSBC as “Shanghai Lil’s” for some time now. What is very saddening is that the once reliable, and highly responsible, Midland Bank of blessed memory was taken over to form part of this lot. The destruction of quality banking in the last two to three decades has been one of the disasters of our history.
I think it important to note that my opinion is not based on a single incident
This is just the latest in a long line of failures, many fines and apparent contempt for regulation that they imply
It’ll be interesting to see how the government respond, Richard.
The ConDems initially talked tough over bonuses. But we know that Osborne and co spoke out against the EU bonus cap, and the government lobbied hard in Brussels to defeat it. In effect that created the environment in which HSBC has been able to formulate this policy (and other banks too, as far as I understand it). So I’m assuming they’ll take the line that they’ve been proven right – that the EU policy is/was unworkable, as they claimed it would be.
Ultimately what we have here, is, as JohnM says, two examples of institutionally corrupt regimes – one political one organisational (sectoral would actually be more accurate) – working in tandem. Some might dispute this, but it’s not that different to what we see in the Ukraine, or indeed in Russia, China and so on. It’s just that the City and our political masters are more adept at making it look as if they are two separate entities, when in fact they are ideologically, culturally and institutionally as one.
Indeed- it is ‘reverse socialism’.
$2.46 billion fine :
http://news100hk.com/news/us-court-fines-hsbc-us246-billion-over-household-international-case-17480
$4.2 billion fine:
http://www.bbc.co.uk/news/business-21653131
$1.9 billion fine:
http://www.reuters.com/article/2012/12/11/us-hsbc-probe-idUSBRE8BA05M20121211
And all the fines paid by the bank customers.
I also note that with the EU specifying maximum bonuses, the banks have now changed to a new system to guarantee payment for poor results and criminal activity!
The fines for HSBC and other banks including Barclays are paid by the Shareholders.
Interesting
That’s not what is said of tax
@ Walter
“The fines for HSBC and other banks including Barclays are paid by the Shareholders.”
And employees.
@ Richard
“That’s not what is said of tax”
That’s exactly what is said of corporation tax – it is born by capital (shareholders) and employees.
There is no evidence it is paid by employees
This is just another neoliberal myth
I haven’t had time to debunk all of HSBCs accounts, yet.
Barclays paid more to the staff then to the shareholders.
Which is why my comment is that there is a reduction of income to shareholders as a result of expenditure.
It is simple.
Compensation in the London investment banking industry is set by US bulge bracket form such as JP Morgan, Morgan Stanley and Goldman Sachs. Although their EU operations are in theory subject to the bonus cap, in practice they are not: all their managers are either based in New York, or are non-domiciled individuals already under dual contracts (typically with a short leg in the UK and long legs in Dubai or New York, depending on whether they are US taxpayers or not).
If HSBC and other EU-headquartered institutions comply with the bonus cap they will immediately find themselves at a significant disadvantage versus their (anyway much bigger and powerful) US competitors. In order to be able to attract and/or retain talent, HSBC at al. have no choice but to find a way around the bonus cap to make their compensation packages competitive.
You really don’t get it, do you?
We actually do not want the City doing these things
And we believe this ‘talent’ is wasted
The higher the salary, the more tax they pay.
Not necessarily
Traders were very keen on the Moyles scheme
Don’t make assumptions
Who is the “we”, in “”We” do not wan the City doing those things”?
As far as I am aware, the UK government, duly elected to represent and govern the British people, opposed the bonus cap.
We is a great many people in the UK
Not all, I agree
How do you feel the talent would be better used?
Why not actually make something of value?
@Walter
As a general rule in the London investment banking business, British employees (obviously a very small minority) pay taxes. Foreign nationals have dual contracts that allow them to receive a substantial portion of their (unremitted) income free of tax.
“As far as I am aware, the UK government, duly elected to represent and govern the British people, opposed the bonus cap.”
Erm…elected is a little bit of a stretch! They got in solely by dint of the extra votes from the Lib Dems who threw their lot in with the tories to give the tories enough seat to form a minority government.
Even if they got in by having enough votes, I don’t recall them having a mandate to protect banker’s bonuses!
“If HSBC and other EU-headquartered institutions comply with the bonus cap they will immediately find themselves at a significant disadvantage versus their (anyway much bigger and powerful) US competitors. In order to be able to attract and/or retain talent, HSBC at al. have no choice but to find a way around the bonus cap to make their compensation packages competitive.”
Translation:
Don’t let the nasty man take away our bonuses or we will up sticks and go to countries that will play ball.
Blackmail of course. As if letting a good proportion of the banking industry sod off somewhere else wouldn’t actually be doing us a favour by helping to create more capital for actual productive investment.
Please go! I doubt they’ll be missed!
Stevo!!
This is not a matter of banks or bankers leaving the country. Rather, it is about bankers simply leaving their London jobs with EU-headquartered banks (Deutsche, Barclays, HSBC) to take employment across the street with a US (or sometimes Swiss or Japanese) firm.
This is because the latter group of institutions, although they should technically also be subject to the bonus cap, have in fact many ways to go around it by putting in place compensation structures already common for their numerous non-domiciled taxpayers.
Far from achieving its intended goal of making EU banks less risky, the bonus cap in fact depletes their roster of quality bankers and provides non-EU competitors with a massive very material advantage. This makes UK and EU banks less able to lend to support the economy and more at risk of having to seek taxpayers’ support in the future.
There is legislation to prevent this now
“Far from achieving its intended goal of making EU banks less risky, the bonus cap in fact depletes their roster of quality bankers and provides non-EU competitors with a massive very material advantage. This makes UK and EU banks less able to lend to support the economy and more at risk of having to seek taxpayers’ support in the future.”
In other words, give in to blackmail, Legislation is in place regarding this as Richard has pointed out. After the crash, there was an opportunity to reintroduce seriously tough banking legislation. The equivalent of the Glass Steagal act should have been introduced immediately! A proper clearing system for derivatives is one that should have been put in place as well.
In a sane world, this would have happened, but this is a world where corporate lobbyists call the tune.
The lunatics are in charge of the asylum.
Speaking as someone who lost a substantial portion of 40 years savings through the wilful neglect, greed and stupidity of the banks and financial sector I may be just a little biased but…..
Our government holds all the risk of toxic debt. They lend our money to the banks at .5%. At the same time they signal open season on punters by failing to address interest rates of 4500% at Wonga et al. A blind eye is turned toward tax avoidance/evasion. That is without delving into PPI, Libor, rate swap derivatives, Forex, Eurobond exploitation and a long catalogue of repeated illegal activities.
Anybody could turn a profit, a blind, deaf, monkey punching a computer keyboard at random could make a profit. The only job requirements are a lack of morals and a total disregard for society around them. Barclays paid their managers twice as much as they paid the owners of the company. They charge me interest rates in double figures, plus arrangement fees, administration fees etc. but when it comes to paying interest well anything approaching 1% is good. And in this wonderful ‘free’ market I can move my account elsewhere — only to find exactly the same situation elsewhere its almost as if the banks were in collusion. I can’t escape to a cash economy because the banks have persuaded successive governments to make that a practical impossibility.
We don’t need these people and their ‘super brains’. What we need is an investment programme at Dartmoor prison and new quarry where these criminals can find out what real work is.
Apologies for the rant.
Rant entirely justified.
Like Uncle Toby in “Tristram Shandy”, nothing should conspire to prevent you from “Riding [your] hobby-horse on the King’s highway”, but especially when that hobby-horse is supported by the facts.
Entirely justified and accurate, as well, Bill (he says, speaking as a victim of an earlier scandal – Equitable Life). And I see from the headlines this morning that the Tory Party are about to relaunch themselves as the “workers party”. Comedy becomes reality!!!
Bill -you are absolutely right! With the banks it’s tails you lose heads I win syndrome. Scamming is to polite a word for it -until the dodgy financial instruments are regulated into non-existence this will carry on impoverishing our communities.
I notice Ann Petiffor has just brought out a book called Just Money downloadable from http://www.primeeconomics.org/ -costs 2.99 to download -useful summary of the state of things.
Ivan – so the Tory Alice-in Wonderland propaganda machine has ‘progressed’ from ‘Hard Working People’ to ‘Workers Party’? Reality turned on its head =Fascism.
The public are swallowing the condescension and lies -one laughs and simultaneously cries!
No need to apologise.
Long custodial sentences coupled to mandatory asset seizure and then bankruptcy.
Stevo
The LDs threw in their lot with the Tories to form a majority government. i.e. more seats than anyone else.
I don’t recall the EU having any greater a mandate to cap bankers bonus than the UK government has to ‘protect’ them.
Well actually, I think you will find it had
Can yu please provide evidence of this. I cant find anything about my local MEP, she doesn’t even have a website.
Perhaps you’ll show me where it says that the EU can decide specific people’s salaries in private sector companies regardless of the position shareholders take?
It is called banking regulation
“The LDs threw in their lot with the Tories to form a majority government. i.e. more seats than anyone else.”
Well…that’s one way to describe it! Another way would be that neither the Lib Dems or the tories had enough to win a majority. The traditional way to win an election is having enough of a mandate from the people to form a government. These two had neither until they joined forces in what is essentially a minority government, just as Wilson’s government in 1964 was a minority government which was hanging on by, if I recall correctly, by 1 seat!
Neither of these two, as I recall in their election manifesto, ever made any mention of protecting bankers bonuses.
‘Neither of these two, as I recall in their election manifesto, ever made any mention of protecting bankers bonuses.’
No MEP (which is the only manifesto we have for the EU)said, as I recall, that they would cap salaries in private companies regardless of shareholder positions – perhaps you’d link to one?
Attention is drawn to point 5 of the comments policy
I misread the title as HSBC: intentionally corrupt