That was the excuse all banks gave in the US during 2008 also.

Dude, they'd lose even more if they let you or me run them. Honestly 600 million means they still lost 7.6 billion. They need to look into where they are bleeding money and put a cork in it.

There's a reason banks go bust. Not sure if you should try to save them.

"They need to look into where they are bleeding money and put a cork in it. "

You think?

My point was that chopping off all the bonuses might save 600 million, but isn't going to stop the bleeding. That's just a small part of the 7.2 billion bleed.

Yeah but Jamiet's point was that people shouldn't be given bonuses for being shit at their job.

But you don't know that those bonuses were given to the shit people. That's the thing about companies. Perhaps their full bonuses to everyone, including the shit people, would have been 3 times that. Maybe they only give the bonuses to the outstanding performers they wanted to keep.

I got a bonus 2 years ago of over 17k. The company lost almost 2 million that year. But I and my team had worked some serious magic that resulted in a fortune 500 company signing a 2.5 million deal saving the company from having a 4 million+ loss. We all got bonuses, no one else did. The company gave out over 250k in bonuses (10% of what the deal was) because we had earned them and would have walked if they didn't. Were they giving bonuses to shit people? No. They were giving them to the one group who had made money that year and denying them to the groups who had lost money.

You can't just say "Oh! They gave out big bonuses while losing big money! Bad company!" unless you know where the bonuses were given.

It was 'bleeding money' from the fact that it bought a bunch of companies prior to 2008 that were effectively worthless and exposed to subprime mortgage lending, this at time when it was already in debt.

I took "too staff" to mean executives, not top performers.

The head of RBS personally got $4 million for his irresponsible buy-out of ABN Amro. The very people making the bad decisions that got RBS into trouble were getting rewarded.

Do the Wall Street shuffle...

"The company lost almost 2 million that year. But I and my team had worked some serious magic that resulted in a fortune 500 company signing a 2.5 million deal saving the company from having a 4 million+ loss."

What 'serious magic' did you work? I swear you come up with loads of convenient stories for whatever the argument du jour is.

Banks loan out large sums to risky groups (mortgages, start up companies, third world nations) because they can get high interests rates. Then if they get paid back they make lots of money and if they don't the government will bail them out. Or with mortgages they repackage them and sell them to somebody else and make money.

The people that made the decisions got rewarded for the initial decision because it brought in money at the start and their isn't any punishment when it goes wrong.

The problem now is the banks made all those risky decisions in asset bubbles, those risky decisions backfired as the bubbles collapsed, the government rescued them with the thinking that if they did not then all credit would dry up, and yet banks aren't lending anyway no matter what inducements they are given.

The only solution that ensures lending while minimizing risk is authentic nationalization.

Staff is *anyone* on payroll, so your prejudice does not equal fact. Leave your prejudice at the door, please.

What are you going on about, Draug?

''Yeah. Because losing £157.7 million a week is a highly skilled job only the most competent and experienced people can be trusted to do, right? ''

how much more could they have been losing? What is your basis for this measure of success?

Draug's point about analyzing who the bonuses went to and why is absolutely relavent, but I also believe there won't be coherent support that bonuses drove results. More important is to analyze total comp though. Bonuses are a much greater portion of compensation in finance. If you are paid 50K plus 50K bonus that is more bonus but less total comp than 75K plus 30K bonus. It would be good to see total comp as a percentage of revenues per division, and relative to other banks. Lastly, earnings may be related to past actions such as permanent impairment of bad assets which is non-cash and shouldn't necessarily penalize new staff. Don't misunderstand me, though, as I said, even a deeper analysis will likely support pigishness rather than defensible logic.

@ora

We aren't talking about some start-up where initial losses are expected. We're talking about an established bank. A bank that loses money is a bad bank.

Actually, if consumer investing is down and consumer credit purchases are down, and at the saw time consumer withdrawals are up, then a bank could easily go in the red as they make their money lending it out and investing what they have on deposit. I'm no banker but even I can see the flaw in your logic. Banks have capital expenditures and obligations they can't avoid (debt on their own real estate, payroll, utilities, taxes) and if the income dries up, they still have to pay those bills.

Yeah, because as a bank they have no resources to measure financial trends and adjust accordingly.

9/11 cost trillions of dollars to businesses of all sorts. Everyone lost money. Could they predict that? Any business could find itself on the losing end of a sudden market change. Fanny May and Freddy Mac failed and brought many a bank down with them. Now, the government bailed them out (the two FMs) but the rest of the financial world was blindsided by it and when the confidence level fell and the market tanked, once again the banks had no way of knowing those two were going to fail or the market was going to respond as radically as it did.

...Did you just...

Now, I can't speak for the Eurozone, but our banks have generally paid back what the were given with interest. The American taxpayer can no longer blame the banks or auto industry for our economic collapse. That is all on the mismanagement by our elected officials now.

Did I just what? Defend the banks? To a degree, yes. Let's face it. Long before this collapse banks warned investors that it came with risk.

Plenty of people warned about the imminent collapse of these things, the banks simply didn't care or listen. They knowingly engaged in reckless behavior, like for example RBS, who sought to expand even when everybody was warning them not to, and they were hardly the only ones to behave this way.

I find it rather nauseating that people go to such lengths to defend banker greed while blaming everybody else.

It would highly depend upon what part of the bank was losing money before any of us can pass judgement. For example, Bank of America is still losing money on its Countrywide acquisition. That's not Bank of America's fault though.

9/11 cost businesses trillions of dollars?

Good one, Osama.

And maple shows he knows nothing... 1.4 trillion just in the fixe days after the market reopened and that was just from the NYSE. So yeah, trillions. The blue chip stocks may have recovered but plenty of smaller companies went bankrupt.

http://www.investopedia.com/financial-edge/0911/how-september-11-affected-the-u.s.-stock-market.aspx

On the first day of NYSE trading after 9/11, the market fell 684 , a 7.1% decline, setting a record for the biggest loss in exchange history for one trading day. At the close of trading that Friday, ending a week that saw the biggest losses in NYSE history, the Dow Jones was down almost 1,370 , representing a loss of over 14%. The Standard and Poor's (S&P) index lost 11.6%. An estimated $1.4 trillion in value was lost in those five days of trading.

...

Draug, while all that is true, the stock market recovered from it. The loss was not a real loss, but an unrealized loss of potential future cash flows. Sure, certain stocks didn't recover, but others probably were boosted after 9/11 more than it would have otherwise been.

The problem with the financial crisis was that the system failed and incentivized poor lending practices. Banks were able to securitize bad mortgages and sell them for a profit, so they did not need to care about where the assets would suffer losses, because they were off their balance sheets. Credit rating companies failed in their duty (They should all have suffered the fate of Arthur Anderson, imo) because if the securitized loans sold, they got paid. If they didn't sell, they didn't make any money. It was the most ludicrous system I've ever seen.

"Not a real loss" is an interesting way of putting it. The modern world is built and driven in things that are not exactly real. Stock markets across the world plummeted. Confidence and the will to invest took a big hit. Over the world projects were put on hold or canceled. Mines weren't built, roads weren't created, schools and hospitals were not constructed etc etc etc. The true cost of 9-11 is likely many thousands of deaths and countless lives denied opportunity, and that's not counting the wars that followed.