What recession? £6.4bn bonuses for City bankers
BANKERS at four City firms have collected bonuses of more than £6.4billion this year, despite the worst financial crisis since 1929, it emerged yesterday.
While the rest of the country struggles under the ravages of the recession, London-based traders at Goldman Sachs, Morgan Stanley, Merrill Lynch and Dresdner Kleinwort have been notified of their bumper payouts.
They come despite the banks having reported a dramatic fall in profits and the Government bail-out of the banking sector.
Goldman Sachs has taken billions of taxpayer funds, as has Morgan Stanley.
And the huge payouts will hand further ammunition to those critics who blame the greed of bankers for the global economic crisis.
They believe such large bonuses have created a culture of short-termism and recklessness which fuelled the excesses in the run-up to the credit crunch and led to millions of jobs being lost.
Liberal Democrat treasury spokesman Vince Cable said those claiming big bonuses were “lucky not to be behind bars”.
Even those working at the four banks concerned were surprised by the size of the bonuses.
One employee said: “I wasn’t expecting a bonus at all. But the injustice is that senior people are getting bonuses at a time when the bank is losing money.” Goldman Sachs, which employs around 6,000 people in the UK, has admitted it has a bonus pot of £1.73billion. Morgan Stanley has a bonus pool of some £2billion, while Merrill Lynch has a pot of around £2.33billion.
At Dresdner Kleinwort, the investment banking arm of the German insurance giant Allianz, is paying out bonuses despite laying off 1,000 workers. Employees in London will be axed in the new year.
A representative for the union Unite said: “At a time when most people are worried about paying their bills or whether they’ll
even have a job next year, these bonuses for bankers are insensitive to say the least.
“The banks should be trying to repair the damage that greed and recklessness have done to the economy, and sorting out lending to businesses so that people can stay in work, rather than rewarding the behaviour that has caused the terrible hardships the people of this country now face.”
Mr Cable said: “Some of these guys should be thinking themselves lucky not to be behind bars, rather than awarding themselves big bonuses.”
He added that as the leading banks were now effectively under written by taxpayers, “these people are simply helping themselves to what ultimately belongs to the public”.
News of the vast bonuses comes after Gordon Brown pledged that banks seeking help from the Government had agreed conditions which would “bring an end to rewards for failure”.
Both the Prime Minister and the Chancellor Alistair Darling said earlier this year that exorbitant bonuses paid to bankers would be better regulated in the future.
Mr Brown said that “going forward, rewards will only be based on performance and long-term value creation”.
“For this Government, and I believe the whole country, the guiding idea is fair reward for hard work, effort and enterprise: not incentives for irresponsibility or excessive risk-taking for which the rest of us have paid,” he said.
