one step closer towards socialism. It's just sad
http://online.wsj.com/article/SB100014241278873232937045783308142851072…
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Yeah, it's a shame.
Do you guys think it will possible for the banks in Europe to circumvent the law in order to keep granting the same salaries ? (for instance granting a bigger fixed salary or stock-options ?)
yup, increase in salaries (RBS did this a while ago, only small increase though), increase in fixed costs, more lazy people no longer having to bust balls to get their bonus, just sitting there getting high salaries.
maybe they can increase salaries a little, but I doubt they can increase them significantly. the idea behind this bonus system is not be forced to pay out high salaries in times of crisis. so banks wont risk increasing salaries too much, because then they will have struggles to pay their employees in bad years.
it is just said. many people dont know how well-qualified you must be to get into finance. and many dont know how long the hours are. they just see the big bonuses, but they dont see the work behind the bonuses.
i partly blame the newspaper. im actually a big fan of quality journalism, but in recent years the quality and objectivity of most newspapers has suffered. they write what sells. and using bankers as scapegoat has unfortunately become very popular. headlines like "bonus excesses in the city" are sales bitches...
in my opinion, the media has become more populist than it used to be. and europe has become more left-wing (maybe with exception of the UK and germany)
"If it keeps raining the levee's gonna break"
Smart move of the EU to chase away an industry that is probably one of the top tax revenue generators in the entire EU zone.
Let's think like bankers for a minute, issue a line of preferreds, only eligible to be held by bank staff, pay a dividend on those annually, gets comp back to where it ought to be.
Oh there's rules all right, but rules are static and solutions are fluid. While I'm not sure of the phrasing of the restrictions, you are allowed to grant stock, and I believe they tax the value of the stock. But if I say that this preferred share that I'm granting is worth a dollar and may have a special dividend, or may not, you'd have a bit of a time proving otherwise. So, don't be foolish about it, either make the employee purchase the pref payroll deduction, or as part of the bonus, ensure it's taxible at a high enough rate to not piss off the regulators enough to chase you on it, and then dividend your way to bonuses.
As far as issuing prefs needing shareholder consent, I think you could make the argument that a small number (relative to the shares in a bank) of non-voting, prefs,which only receive occasianal special dividends, is a non-material item, and slide it through with a statement, no vote required.
:( this sucks
I wonder if cash bonuses (read: under the table money) will be used more often?
It really is ridiculous. I understand that there is always a tension between regulators and financial institutions, and that the role financial institutions serve is very complicated and can have dire consequences on the entire economy, both good and bad, due to their influence on the money supply via deposits and lending, as well as there now pervasiveness through all financial functions.
That said, the regulation of executive pay is unfounded and an intrusion on the rights of citizens and shareholders. These are private companies. Compensation is rightly in the discretion of the board, and, should shareholders see fit via proxy, the shareholders (e.g. proxy vote requiring approval of executive pay). The political opportunism that we have seen the past few years is nothing less than despicable. Furthermore, limiting compensation does nothing to stem the systemic risk posed by these banks -- nothing at all. Rather, it represents politicians seeking to gain "brownie points" by attacking the "evil bankers."
Now of course we are biased on this board because we all hope to be one of these executives on day, but even so, taking a step back, it is very clear to see when a government has taken the step past governance and to dominance.
What effect will this have on junior bankers? I guess analyst pay will be unchanged, since the bonus rarely exceeds base for analysts 1-3. According to the source I have, an associate 1 on average has a higher bonus than base (at least in 2010). So everyone from associate 1 would be affected. Is this correct? Also, with shareholder approval the ratio can be increased to 2x base. Does this have to be approved on an employee-to-employee basis, or just once for all exmployees? Because that would help a lot. http://www.wallstreetcomps.com/2010_Wall_Street_Comps_Survey.pdf
This will probably affect NYC salaries as well -- they won't have to pay us as much because where else would we go? Top talent will probably migrate to NYC making it harder to get jobs too.
yea, I think you are right.
also, landing a hedge fund or private equity job will be significantly harder from now, since now more analysts will apply for a switch to the buy side (since only banks are affected by the bonus cap)
i quoted the wrong message. you get the point
Does this affect US banks with Euro operations?
yes, unfortunately. As for as I know, the new law affects all European banks plus all banks operating in Europe. So salary cap for everyone at European banks (e.g. Barclays, Deutsche) no matter where they work and salary cap for everyone working in Europe, so even, say, a GS or citi employee based in London or Frankurt
Well shit. London thought they were slumping before, NYC is definitely the undisputed financial capitol again.
Wow, this sucks to be in Europe, I wonder if this means Euro bankers will fled to the U.S or Asian markets. I think some smart lawyers will find a way around this.
"The initiative, part of a broader law that forces lenders to build up more-robust financial cushions, is designed to reduce incentives for the type of risky behavior widely blamed for contributing to the 2008 financial crisis."
They do realize that not everyone who works in a banking institution is associated with this, right? (Not knocking trading at all, just highlighting that everyone who works in finance is perceived as being a "banker" by the press.)
people are just THAT stupid.
This only affects BB in Europe and MM firms in Europe that are "big". How will this affect bouqites and MM firms that solely do banking, Greenhill, Moelis can't they just jump ship to those firms?
and european BBs around the globe. the rule even plays to, say, a deutsche bank trader in nyc or hong kong.
as for jumping to firms like greenhill or moelis, maybe some will, but there are certainly not enough places for everyone, so i guess itll become even more competitive landing jobs at such firms than it already is
This law is quite fucked up, now that I think about. Cause it only affects ppl who work in banks, but what about ppl in entertainment, marketing lawyers who rake in millions.
If your going limit how much a person can make, make it across the board not just to one specific group.
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