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Bankers' bonuses - the waterbed principle in action Bankers' bonuses – the waterbed principle in action
(35 minutes later)
It is hard to know whether to laugh or cry as Philippe Lamberts, the poor old Belgian Green MEP who helped to design the EU's cap on bonuses, denounces British banks for circumventing the new rules by jacking up the salaries of their senior staff.It is hard to know whether to laugh or cry as Philippe Lamberts, the poor old Belgian Green MEP who helped to design the EU's cap on bonuses, denounces British banks for circumventing the new rules by jacking up the salaries of their senior staff.
Lamberts is not alone in thinking the banks are behaving shamelessly. On Wednesday, for example, Lloyds Banking Group and Barclays will increase the fixed pay of their chief executives by about £1m.Lamberts is not alone in thinking the banks are behaving shamelessly. On Wednesday, for example, Lloyds Banking Group and Barclays will increase the fixed pay of their chief executives by about £1m.
The banks' argument is that António Horta-Osório and Antony Jenkins cannot possibly be expected to take a cut in their bonus-earning potential on the chin. If bonuses are to be limited to 200% of salary, then these toilers' salaries (or salaries plus quasi-salaries if "allowances" are used) must be doubled, or more than doubled in the case of Stuart Gulliver at HSBC.The banks' argument is that António Horta-Osório and Antony Jenkins cannot possibly be expected to take a cut in their bonus-earning potential on the chin. If bonuses are to be limited to 200% of salary, then these toilers' salaries (or salaries plus quasi-salaries if "allowances" are used) must be doubled, or more than doubled in the case of Stuart Gulliver at HSBC.
But Lamberts was living in la-la land if he thought big banks would behave differently. The waterbed principle – push down in one area, and another will go up – was bound to apply to bankers' pay. The bonus cap, if it was intended as a clampdown on excessive rewards, was guaranteed to fail. Naive legislators confront unblushing bankers: the outcome was inevitable.But Lamberts was living in la-la land if he thought big banks would behave differently. The waterbed principle – push down in one area, and another will go up – was bound to apply to bankers' pay. The bonus cap, if it was intended as a clampdown on excessive rewards, was guaranteed to fail. Naive legislators confront unblushing bankers: the outcome was inevitable.