RBS and Lloyds CEOs get paid more millions, despite losses and profit falls

SOURCE GUARDIAN: RBS pays chief executive Ross McEwan £3.8m as it reports £2bn loss

The bank’s full-year results for 2015 follow its admission last month that it was on track to report its eighth consecutive year of losses because of a £2.5bn hit to profits for a string of problems, including having to pay compensation for payment protection insurance mis-selling. Shares in the bank, 73%-owned by the taxpayer, slumped 10% in early trading after the figures were announced. McEwan – who has received the highest pay for a chief executive of the bank since the bailout – said further problems lay ahead for the bank, particularly from “big conduct” issues. Among these is a penalty, yet to be determined and which could run to billions of pounds, for the way it sold US mortgage bonds in the run-up to the 2008 banking crisis. The results – which followed a £3.5bn loss a year ago – mean that the bank has incurred more than £50bn of losses since 2008, when £45bn of taxpayer funds was used to prevent it from collapsing. The performance of the bank was accompanied by disclosures about pay. It said 121 of its staff received more than €1m (£800,000) during the year while its former chief executive Stephen Hester, who was forced out in 2013, received £2.1m from bonus schemes that dated to his time at the bank.

SOURCE GUARDIAN: Lloyds hands chief executive £8.5m pay package

Lloyds Banking Group has handed its chief executive an £8.5m pay deal and ignited its share price by announcing a special dividend – despite reporting a 7% fall in profits. António Horta-Osório’s pay was disclosed alongside 2015 financial results showing profits had been knocked to £1.6bn by a further £4bn charge for mis-selling payment protection insurance (PPI). The bank, bailed out in 2008, has now incurred a total bill of £16bn for the long-running scandal which drove it to a fourth-quarter loss. The government has been gradually cutting back its stake, from 43% to less than 10%, but despite Thursday’s rally the shares remain below the 73.6p break even price. He was also handed shares worth £3.6m in a long-term incentive plan, which could pay out in three years’ time. His 10-strong management team were handed shares worth £17m in the same scheme. The total bonus pool was cut to £353m from £369m. Sixty-six staff received total pay of €1m (£800,000) or more.

OUR RELATED STORIES:

The FCA fails again. We don't need a review of banking culture, we need a review of regulatory culture

Privatisation of RBS: will the taxpayer get their money back let alone make a profit? Osborne says yes, National Audit Office says no!

Is it time to stop bashing bankers? Not when you look at what they’ve got caught doing since the 2007/08 bank bust

In the UK, £136bn in bonuses to bankers between 2004 and 2013. Globally, £166bn in fines for rigging, laundering, etc. But no bonus clawbacks

Who needs fat cat pay? The Germans don't. See the comparison with the UK

The incomes of the bottom 90% have hardly risen in 20 years, whilst the top 1%’s has doubled

Riposte: What does banking contribute to UK Plc? 7 myths exposed, and why we must rein them in

As of 2014, the £20bn paid out by the banks for their PPI mis-selling is more than all their taxes paid since 2008

The bailout of our banks continues. Not from the taxpayer, but from your pathetic savings interest rates. See the BofE data

Financial Reporting Council says just 2% of bank and building society audits are up to scratch

The Interest Rate Swaps that screwed 40,000 small and medium sized businesses: how the regulator allowed the banks to be judge and jury for their own dodgy deals

RBS accused of seizing small business assets and selling them at knock-down prices to an RBS subsidiary

The government wants you to think we made a profit on sale of Lloyds Bank shares. Actually we made a thumping loss!

How re-mortgaging covered up the theft of Britain's growing wealth in the boom, and helped cause the bust

Read More

HSBC has decided to stay headquartered in the UK. Shame. We were hoping they’d move to Hong Kong

KJ and Fee explain...

SOURCE GUARDIAN: HSBC to keep its headquarters in London, after concessions from chancellor

HSBC is to keep its headquarters in the UK after a 10-month review during which time the government has made a series of changes regarded as favourable to the bank. After the May 2015 Conservative election victory the chancellor, George Osborne, has backed away from creating rules intended to toughen up the regime for holding senior bankers to account. He had said he would reverse the burden of proof but has reverted to the more usual system of bankers guilt having to be proven. He also changed the system for taxing banks. A bank levy on balance sheets, which hit HSBC hardest of all the banks, is being scaled back and an eight percentage point corporation tax surcharge on profits is regarded as hitting its smaller rivals harder. Analysts have calculated that the changes mean HSBC will pay £300m to the exchequer – down from £1bn under the previous bank levy system. 

SOURCE BLOOMBERG: HSBC sued over drug cartel murders after laundering probe

Families of U.S. citizens murdered by drug gangs in Mexico have sued HSBC, claiming the bank can be held responsible for the deaths because it let cartels launder billions of dollars to operate their businesses. The lawsuit brings fresh scrutiny to the Mexican activities of HSBC, which in 2012 paid $1.9 billion to resolve a criminal investigation into whether it violated U.S. sanctions laws and laundered at least $881 million on behalf of drug cartels. The new case recounts a series of murders in 2010 and 2011 in horrific detail, arguing that the bank should be held to account for them under the U.S. Anti-Terrorism Act. Lesley Redelfs was four months pregnant when she and her husband, Arthur, were shot by the Juarez cartel after leaving a children’s birthday party hosted by the U.S. Consulate in Ciudad Juarez, where she worked. Jaime Zapata and Victor Avila Jr. were special agents for Immigration and Customs Enforcement, driving to Mexico City when they were run off the road by two vehicles filled with hit men from the Los Zetas cartel, who then opened fire. Avila survived. Rafael Morales Jr. was abducted on his wedding day, as were his brother and uncle, and the three died of asphyxiation after members of the Sinaloa cartel wrapped duct tape around their heads. HSBC already is among banks facing a lawsuit from families of U.S. soldiers killed or injured by attacks in Iraq on accusations that the firms helped Iran process transfers and finance Hezbollah and other militant groups. 

OUR RELATED STORIES:

The FCA fails again. We don't need a review of banking culture, we need a review of regulatory culture

Privatisation of RBS: will the taxpayer get their money back let alone make a profit? Osborne says yes, National Audit Office says no!

Is it time to stop bashing bankers? Not when you look at what they’ve got caught doing since the 2007/08 bank bust

In the UK, £136bn in bonuses to bankers between 2004 and 2013. Globally, £166bn in fines for rigging, laundering, etc. But no bonus clawbacks

Who needs fat cat pay? The Germans don't. See the comparison with the UK

The incomes of the bottom 90% have hardly risen in 20 years, whilst the top 1%’s has doubled

Riposte: What does banking contribute to UK Plc? 7 myths exposed, and why we must rein them in

As of 2014, the £20bn paid out by the banks for their PPI mis-selling is more than all their taxes paid since 2008

The bailout of our banks continues. Not from the taxpayer, but from your pathetic savings interest rates. See the BofE data

Financial Reporting Council says just 2% of bank and building society audits are up to scratch

The Interest Rate Swaps that screwed 40,000 small and medium sized businesses: how the regulator allowed the banks to be judge and jury for their own dodgy deals

RBS accused of seizing small business assets and selling them at knock-down prices to an RBS subsidiary

The government wants you to think we made a profit on sale of Lloyds Bank shares. Actually we made a thumping loss!

How re-mortgaging covered up the theft of Britain's growing wealth in the boom, and helped cause the bust

Read More

Osborne is using pension taxes as a “milch cow” to pay off the deficit. New rules will net him an extra £5bn

KJ, Chris and Fee come to terms with it all...

SOURCE GUARDIAN: Pension taxes are 'milch cow' for chancellor, says IFS head

George Osborne is using pension taxes as a “milch cow” to pay off the deficit, the head of the Institute for Fiscal Studies has said. The chancellor is expected to announce the results of a Treasury inquiry into tax on pensions in the budget on 16 March. Among the changes being considered is the replacement of variable tax relief on pension contributions with a single, flat-rate of between 25% and 33%, which would cause high earners to lose some of their rebates. Paul Johnson, director of the leading independent thinktank the IFS, said: “The tax regime has been changed and changed again as pension savings have proved something of a milch cow for the current chancellor. “By reducing the amount that can be put in a pension free of tax in any one year and the maximum size of the accumulated pot, he has increased tax revenues by more than £5bn a year.” Johnson said changes to pensions tax relief could cause “the implicit contract at the heart of our pension system [to] buckle under the pressure”. “Governments of all stripes have recognised that widespread access to good private pensions is an essential part of the implicit deal with the voter — we won’t pay you much of a state pension, but we will make sure you have the chance to save for yourself,” wrote Johnson in the Times. “And at the heart of that deal has been the tax treatment of private pensions. It should go without saying that nobody would tie up hundreds of thousands of pounds in a pension, which they can’t access for decades, if there weren’t some benefit for doing so compared to saving in some other way. That benefit is tax relief.” Former Conservative leadership hopeful David Davis told the Times that such a move would deter people from providing a full state pension for themselves. “It’s problematic because the pension industry used to be the jewel in the economic crown when it comes to having a population looking after themselves.”

OUR RELATED STORIES:

Tory promises of "Low Tax, High Pay" has given us higher taxes & lower pay. See the stats

Spending our property wealth led to the economic crash in 2008. Will Osborne’s new rules allowing us to spend our pension pots lead to another?

Austerity? A smokescreen to change our expectations, so the 99% expect less and the 1% get more

The shift from full to part time explains 80%+ of the UK's 1m new jobs

Is your Cost of Living crisis over?! Average wages are still back where they were 10 years ago

Graphs at a glance: Budget 2014 document shows we’re growing through borrowing. Again. That's why Britain needs a pay rise

Why privatise the successful East Coast Mainline? See all the performance stats here

Graphs at a glance: Infrastructure investment: UK ranks 24th out of 27 EU nations. France ranks fifth, Germany ninth

Energy and Rail privatisation: historical data shows the corporations made a profit, the taxpayers and customers made a loss

Graphs at a glance: Despite all the promises to spread the sugar London is the big winner from the HS2 high speed rail link

No rise in Housing Benefit claimants for 30yrs but the bill quadrupled. Why? Declining builds, rising rents

How re-mortgaging covered up the theft of Britain's growing wealth in the boom, and helped cause the bust

Is it time to stop bashing bankers? Not when you look at what they’ve got caught doing since the 2007/08 bank bust

Read More

Regulator quietly shelves inquiry into banking culture. Another victory for the bank lobby

Chris has it all explained by a banker...

SOURCE BBC NEWS: Banking culture inquiry shelved by regulator FCA

The FCA had planned to look at whether pay, promotion or other incentives had contributed to scandals involving banks in the UK and abroad. The Treasury denies involvement in the decision - which some commentators have suggested was politically motivated. Banks around the world have faced huge fines from regulators for their involvement in numerous scandals. In May the news agency Reuters calculated that 20 global banks had paid £152bn in fines and compensation to customers since the 2008 financial crisis. The decision to drop the inquiry comes six months after FCA boss Martin Wheatley - who was originally hired because of his reputation as a tough regulator - was effectively sacked by Mr Osborne following two tumultuous years in the role. Many in the City had found Mr Wheatley's approach too combative and raised concerns about some of the language he used in reference to the banking industry. Percival Stanion, head of multi-asset strategies at Pictet Asset Management, also suggested that it was "no coincidence" that the investigation was being dropped at a time when HSBC was reviewing whether to keep its headquarters in London. HSBC has been a vocal critic of the bank levy, which Mr Osborne reduced in his summer budget following the general election. This will be seen by many as further evidence that regulators and the government have decided to take a softer line with the banks and bring the "banker bashing" era to a close.

OUR RELATED STORIES:

The FCA fails again. We don't need a review of banking culture, we need a review of regulatory culture

Privatisation of RBS: will the taxpayer get their money back let alone make a profit? Osborne says yes, National Audit Office says no!

Is it time to stop bashing bankers? Not when you look at what they’ve got caught doing since the 2007/08 bank bust

In the UK, £136bn in bonuses to bankers between 2004 and 2013. Globally, £166bn in fines for rigging, laundering, etc. But no bonus clawbacks

Who needs fat cat pay? The Germans don't. See the comparison with the UK

The incomes of the bottom 90% have hardly risen in 20 years, whilst the top 1%’s has doubled

Riposte: What does banking contribute to UK Plc? 7 myths exposed, and why we must rein them in

As of 2014, the £20bn paid out by the banks for their PPI mis-selling is more than all their taxes paid since 2008

The bailout of our banks continues. Not from the taxpayer, but from your pathetic savings interest rates. See the BofE data

Financial Reporting Council says just 2% of bank and building society audits are up to scratch

The Interest Rate Swaps that screwed 40,000 small and medium sized businesses: how the regulator allowed the banks to be judge and jury for their own dodgy deals

RBS accused of seizing small business assets and selling them at knock-down prices to an RBS subsidiary

The government wants you to think we made a profit on sale of Lloyds Bank shares. Actually we made a thumping loss!

How re-mortgaging covered up the theft of Britain's growing wealth in the boom, and helped cause the bust

Read More

It was money and mollycoddling that ruined the banking industry. We don't need a review of Banking Culture, we need a review of Regulatory Culture.

In December 2015 the Financial Conduct Authority (FCA) ditched its Banking Culture Review. In its 2015/16 plan the FCA promised this “Culture Review” of banks stating: 


“In 2015/16 we will conduct a new thematic review on whether culture change programmes in retail and wholesale banks are driving the right behaviour, in particular focusing on remuneration, appraisal and promotion decisions of middle management, as well as how concerns are reported and acted on.” 

A review into whether bankers are Paid, Praised, and Promoted too much for doing the wrong things? And how they treat whistleblowers telling on these wrong things? What's not to like?

Was this FCA U-Turn due to road blocks raised by banking lobbyists and their little helpers in government? Or is it a realisation that the bankers are not responsible for their misdeeds. A realisation that bankers are suffering too, suffering from Affluenza? A realisation that the real cultural problem is actually somewhere else?

“Affluenza” is an affliction brought on by having too much money. The Affluenza Defence pleads that the malefactors have so much money and are so molly-coddled they can’t tell right from wrong. The defence attorney asserts the poor rich things, brought up by weak indulgent guardians, earnestly believe money can make any problem go away. Therefore, having been deprived of a conscience due to this surfeit of cash and lamentable guardianship, the affluenza-afflicted individuals can’t be held responsible for their acts. The fault lies not with the perpetrator, but with the money and the carers.

It is a defence successfully deployed to avoid retribution on both sides of the Atlantic.

In the USA a wealthy youth escaped jail, getting away with probation, having been convicted in a Texas court for a reckless intoxicated (by booze) crash resulting in the deaths of four people. The Guardian newspaper reported:
"During the sentencing phase of Couch’s trial, a defense expert argued that Couch’s wealthy parents coddled him into a sense of irresponsibility – a condition the expert termed “affluenza”. "

In the UK wealthy bankers get away scot free for mischief resulting in a reckless intoxicated (by bonuses) crash that caused The Great Recession. Their fines paid by shareholders (collapsing shareprice and dividends) and customers (higher profit extraction). 

The bankers had been in trouble before this crash and got themselves into trouble again after it, convicted of various frauds and scams including LIBOR frauds, Payment Protection Insurance (PPI) scandals, Interest Rate Swaps Agreements (IRSA) scams, and more. Clearly a deeply ingrained cultural problem. But, following the Affluenza argument, perhaps not among the bankers.

Like spoiled children around the world, the British banking industry has learned by repetition they can get away with anything. Once their guardians have got past all the scolding and finger wagging, they quietly pour water over their reforming zeal, put away their punchy pronouncement, and everyone carries on more or less as before. 

The grim truth is ripping off people is legal in British law. Consumer protection legislation states so long as the ‘average consumer’ is not cheated just about anything goes. The ironically named Office for Fair Trading even provides a helpful flowchart, to ensure even the most weak witted merchant will understand what their ripping-off rights are. In the simplest of terms the flowchart shows the above "average consumer" is protected, the below average is not.  Most things in nature follow the Normal Distribution, which means half the population is 'below average' and so is fair game.

Annotations in RED are by us.

The “Culture Review” of bankers was cancelled not to protect the bankers. It was cancelled to protect the guardians – the regulators, the courts, and the law makers in Parliament. Not because it would expose their powerlessness in the face of bankers' reckless greed and ruthless lobbying, but it would reveal something far worse. It would have revealed to all us ripped-off Britons that the banking culture is absolutely in keeping with the culture in ripped-off Britain.

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Household debt is heading back to pre-crash levels

SOURCE DAILY MAIL: Families splashing out on credit cards drives household debt back to pre-crash high of £40BILLION

The shock figures, buried in the latest forecasts by the Office for Budget Responsibility (OBR), reveal that families are set to spend £40 billion more than they earn this year. The OBR, which produces independent forecasts for the Treasury, suggests this figure will soar to almost £50 billion a year by 2020 as consumers carry on spending. After years of austerity, during which time many families cut their spending and paid down their debts, household debt level are now on course to return to record levels. The OBR forecasts that household debt will reach 163 per cent of incomes by 2020 – close to the 168.2 per cent recorded in the first quarter of 2008. Labour, which uncovered the figures, last night said ‘alarm bells should be ringing’. The new figures reveal how households tightened their belts in the wake of the financial crisis. In the depths of the crisis in 2009/10, families spent £67 billion less than they earned as they moved to cut their debts. As the recovery took hold, families gradually started spending again so that by 2013/4, spending exceeded borrowing by £12.4 billion, and has remained in the red ever since. The latest figures also show that interest payments on the debts racked up by families will rise by almost £6 billion a year by 2020 – raising fears about whether some will be able to make repayments.

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What's the catch? MPs discover investment banks charged only £1 to “help” Treasury re-privatise Lloyds and RBS

SOURCE GUARDIAN: What's the catch? MPs warn UKFI over banks' £1 privatisation fees

UK Financial Investments (UKFI) is the company established by the Treasury to hold the taxpayers’ stakes in RBS and Lloyds. It has been warned to remain “ultra-vigilant” after it was revealed some of the City’s biggest investment banks – including Goldman Sachs and UBS – are charging the government as little as a £1 fee for work that would normally cost tens of millions of pounds. Representatives of UKFI told the Treasury select committee it had paid just £15 for help and advice related to the sale of shares in Lloyds Banking Group and RBS which would normally have cost around £38m. Oliver Holbourn, head of market investments at UKFI, said some City firms had even offered to pay the government to work on its privatisations. The banks, however, eventually concluded that such arrangements could be an offence under the US foreign corrupt practices act. James Leigh-Pemberton, the boss of UKFI, said he assumed the banks worked for £1 because of the caché associated with such high-profile work. But Conservative MP, Chris Philp, warned UKFI to proceed with caution: “I’ve never encountered an outfit like Goldman Sachs or Morgan Stanley acting in a charitable manner,” he said. Steve Baker, another Conservative MP on the committee, said UKFI needed to give clear answers about where the investment banking advisers are making money, given the low fees. “I feel sure that many of my constituents would join me in regarding in the utmost astonishment that the same organisations that have been fined for repeat rapacious misconduct are now the jolly good chaps we imagine from the past and now charging just £1 for their services”.

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Our banks aren't lending to the real economy. Maybe Corbyn’s QE and National Investment Bank will

KJ get's there in the end, with help from Fee and Chris...

SOURCE TELEGRAPH: Five good things about Corbyn (even if you're not a Labour supporter)

Did you ever wonder why the banks and the City (who caused the great recession) were also the largest beneficiaries of re-inflating the economy with quantitative easing? And did you not perhaps feel a little aggrieved that, once they’d got what they wanted, they carried on as if nothing had happened, displayed no gratitude whatsoever and changed their ways not a bit? Anyway, history has shown that there is alternative in the form of a massive public works programme. You know, like the New Deal. A response to an economic calamity that benefits everyone, not just the people who caused it. Imagine if, instead of a few new towers in the City we had new jobs, new ports, new roads and new railways. Imagine, if instead of austerity, we had government spending. You wouldn’t even need to print money to do it. Rather, governments could borrow it - and at the lowest rates for decades. The Economist recently described the failure of governments to borrow to build as a “missed opportunity”, while Standard & Poor’s reckons that, for every 1% of GDP spent on infrastructure the UK’s economy would grow by 2.5 per cent.

SOURCE STANDARD & POOR'S: Global Infrastructure Investment: Timing Is Everything (And Now Is The Time)

Standard & Poor’s sees clear economic benefits to G20 countries’ increased public spending on infrastructure–with the so-called “multiplier effect” of an increase in spending of 1% of real GDP running as high as 2.5 in a three-year period. The multiplier effect is generally greater in developing economies than for more developed countries; for example, China, India, and Brazil would all enjoy a boost to GDP of at least double the increase in investment. For Europe, it’s clear that a concerted effort across the region would have a greater effect than country-specific increases in spending. For developed nations, the increase would boost employment substantially–adding more than 700,000 jobs in the U.S. and about a million in the EU. In addition to the short-term boost to jobs and aggregate demand, infrastructure investment often yields long-term benefits by enhancing efficiency.

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