Lloyds posts 3.5bn loss...

[pap]

...but is still going to pay out 375M worth of bonuses.

 

Lloyds Banking Group has painted a subdued outlook for the UK economy as the bailed-out bank revealed it had plunged to a £3.5bn loss in 2011 and would pay out £375m in bonuses.

 

 

The chief executive, António Horta-Osório, reiterated the prolonged low interest rate environment would mean some key targets would not be met on time, but the bank would benefit from a faster than expected reduction in impairment charges during 2012.

 

 

At 35.6p the shares were among the biggest fallers in the FTSE 100, down 2.4%. The drop has left the taxpayer with a £10bn loss on the 41% stake in the bank amid concerns about its forecasts this year for profitability, measured by so-called net interest margin.

 

 

 

Don't know about anyone else, but if I'd performed that badly at work, I'd be marched to the gates and given a small kicking by security.

 

Guardian link

[trousers]

No comment

[pap]

Do you still bear the scars of jack-booted security, trousers?

 

No further questions your honour

[dune]

Bonuses are nothing but a side show. They are insignificant and a side show to real issue of banks not having the liquidity to lend. Personally I'm quite pleased with these latest figures as moved into corportate bonds beause despite the current rallying in equity markets I think it's fake, and they is going to be another crash very soon.

[Minty]

I'm counting the days until my debt with LTSB is paid off so I can sever my ties with them altogether.

 

Even putting aside any discussions about overall bank performance and bonuses etc, etc, they have changed so much over the years (I've had an account with them for about 25 years now since my Black Horse Young Savers account or whatever it was called), that I simply don't rate them at all nowadays. If I go in to the branch for any kind of discussion, all I actually get is a sales pitch. Staff only care about selling you more products because they're paid partly on commission and the whole idea of providing a good service seems to have been lost.

 

There are some good staff in my local branch, but I mostly use the branch near work and I hate it in there.

[alpine_saint]

Can never figure out how a company can pay out bonuses if a loss is made. My company dont. This years bonus pot at Lloyds TSB is over 10% of the loss.

[alpine_saint]

...but is still going to pay out 375M worth of bonuses.

 

 

 

Don't know about anyone else, but if I'd performed that badly at work, I'd be marched to the gates and given a small kicking by security.

 

Guardian link

 

Have to agree.

[Saintandy666]

Apparently these losses are 'good losses' though, as they are Lloyds and RBS losing and taking loses on bad assets and getting it out of their systems. I'm split on these mega headline bonuses. One half of me says, no-one should get paid that much, especially on top of their humongous salary already. But at the same time, if we want our tens of billions back, we have to pay the salaries that the top people demand or it will never be a successful business. There aren't many people capable of running a huge business. And if other banks are paying bonuses, and we refuse to none of the best will come and sort our nationalised banks out.

[John Boy Saint]

...but is still going to pay out 375M worth of bonuses.

 

 

 

Don't know about anyone else, but if I'd performed that badly at work, I'd be marched to the gates and given a small kicking by security.

 

Guardian link

 

I doubt I would even make the gates!!

 

For those of us outside the banking sector, bonus payouts for overall failure just don't compute, even more so if you work your whatsits off, even more so if you work in a performance = positive results industry.

 

Would there really be a brain drain if these payments were stopped, and if there was to the dramatic levels that spokesmen allude to then surely there would be a glut of banking folk flipping a coin and chasing down a few openings elsewhere which would be the case if globally the banking system is having a rough ride.

[Special K]

I've had some dealings with them on commercial construction projects over the last 6 years. Pre economic collapse, they were so gung-ho, it was untrue. I saw at first hand the supposed "due diligence" they were obliged to undertake, but it never amounted to more than a cursory glance over someone else's figures. As long as someone said it was ok, then hey, they could take it as ok. Crazy.

 

Then, as it all went breasts-up, the ineptitude of the same cowboys shone through. Previously big-bollocked bulls!tters were replaced by frightened little boys, who couldn't make a decision and referred everything "upstairs". Fortunately, most of them were shown the door during 08 - 09. However, this had the nasty effect of the future of projects being determined by the faceless tools up at HQ. Viable schemes were closed down in a blind panic to declare "toxic" debt and some very good people lost a great deal of money, or worse, their livelihoods.

 

Quite honestly, i've no time for them. And certainly no time for them dishing out bonuses whilst making a thumping great loss. Tossers.

[Lord Duckhunter]

I saw this on the BBC news last night, it was a typical picece of BBC reporting. Right at the end the guy said, " have they made the bank safer, and therefore protected the British taxpayer, undoubtably yes".

 

I then looked at a few facts. It is far now less reliant than it was on borrowing from unreliable providers of funds, such as other banks and big financial institutions. They have off loaded billion of £ worth of debt. It's retail arm, increased profits by 45%,insyrance from a £295mil loss to a £454Mil profit.

 

It has taken a loss of £1bn plus Euros in Greece, It's Ulster bank is making massive losses due to what happened in Ireland, and it had to pay out £850 mil in misselling compo, sold to people years ago.None of which is of the present regime making.

 

The whole picture is not black and white with RBS, and it being used as a political football is no good at all. Hester and his people had 2 goals, 1 was to stop the taxpayer from more exposure and then 2, was to return the taxpayers money. It has pretty much done number 1, does that not merit some sort of bonus, bearing in mind it's pay levels are a lot lower than other banks (the BBC say RBS's average pay per investment banker of £112,000 compared with £199,000 at Barclays Capital.)

 

I liken it to a football manager asked to take on a job mid season with a team bottom of the league. First season the board want him to save them from relegation, the next season they want promtion.They wouldn't go back at the end of the first season and say, "you cant have your bonus, because although you saved us from relegation you lost a lot of games, and we cant reward failure".

 

I'm not saying it's right or proper that in one year Bankers earn enough for me to retire on. But, the better the bankers, the quicker we'll get our money back. If you want the best, unfortunately you have to pay. If we left some bods in Whitehall to run RBS on civil service salaries, we'd never see our money back.

[trousers]

I saw this on the BBC news last night, it was a typical picece of BBC reporting. Right at the end the guy said, " have they made the bank safer, and therefore protected the British taxpayer, undoubtably yes".

 

I then looked at a few facts. It is far now less reliant than it was on borrowing from unreliable providers of funds, such as other banks and big financial institutions. They have off loaded billion of £ worth of debt. It's retail arm, increased profits by 45%,insyrance from a £295mil loss to a £454Mil profit.

 

It has taken a loss of £1bn plus Euros in Greece, It's Ulster bank is making massive losses due to what happened in Ireland, and it had to pay out £850 mil in misselling compo, sold to people years ago.None of which is of the present regime making.

 

The whole picture is not black and white with RBS, and it being used as a political football is no good at all. Hester and his people had 2 goals, 1 was to stop the taxpayer from more exposure and then 2, was to return the taxpayers money. It has pretty much done number 1, does that not merit some sort of bonus, bearing in mind it's pay levels are a lot lower than other banks (the BBC say RBS's average pay per investment banker of £112,000 compared with £199,000 at Barclays Capital.)

 

I liken it to a football manager asked to take on a job mid season with a team bottom of the league. First season the board want him to save them from relegation, the next season they want promtion.They wouldn't go back at the end of the first season and say, "you cant have your bonus, because although you saved us from relegation you lost a lot of games, and we cant reward failure".

 

I'm not saying it's right or proper that in one year Bankers earn enough for me to retire on. But, the better the bankers, the quicker we'll get our money back. If you want the best, unfortunately you have to pay. If we left some bods in Whitehall to run RBS on civil service salaries, we'd never see our money back.

 

Look. I'm getting fed up with people delving beneath sensationalist headlines to come up with rational analysis of situations. This has got to stop otherwise we'll have nothing to rant about.

 

FFS

[Thedelldays]

I saw this on the BBC news last night, it was a typical picece of BBC reporting.

 

can't be...the BBC is the envy of the world and is the bastion of impartiality

[Gemmel]

Can never figure out how a company can pay out bonuses if a loss is made. My company dont. This years bonus pot at Lloyds TSB is over 10% of the loss.

 

Think about it in football terms.

 

If Sainst got relegated, palyers would still get their apperance bonuses, winning bonues (for the games they won) and goal bonues for goals they scored, but ultimately they still failed.

 

And please dont kid yourself that no one in your company doesnt get a bonus if you make a loss

[trousers]

Think about it in football terms.

 

If Sainst got relegated, palyers would still get their apperance bonuses, winning bonues (for the games they won) and goal bonues for goals they scored, but ultimately they still failed.

 

And please dont kid yourself that no one in your company doesnt get a bonus if you make a loss

 

Or, perhaps another football analogy, but closer to home....

 

If Trevor Birch saves Pompey from extinction but they end up getting relegated in the process, the outcome, whilst undesireable, is still better than the worst case scenario (if you happen to be a Pompey supporter that is). Ergo Birch should get a suitable perfomance related 'reward'.

[alpine_saint]

Think about it in football terms.

 

If Sainst got relegated, palyers would still get their apperance bonuses, winning bonues (for the games they won) and goal bonues for goals they scored, but ultimately they still failed.

 

And please dont kid yourself that no one in your company doesnt get a bonus if you make a loss

 

Our offical general company bonus scheme has been modified to remove individual business unit targets; we win or lose together. I cant confirm that certain individuals dont get personal incentive schemes, no...

[Doctoroncall]

Think about it in football terms.

 

If Sainst got relegated, palyers would still get their apperance bonuses, winning bonues (for the games they won) and goal bonues for goals they scored, but ultimately they still failed.

 

And please dont kid yourself that no one in your company doesnt get a bonus if you make a loss

 

Not knowing what the bonuses are for it's difficult to make a judgement, i.e. are the targets worthy in a business sense and are they part of the long term benefit of the company.

 

Sticking with your football analogy, Storrie the CEO got a win bonus. Doesn't make sense - the only way he can influence it is to get the club to purchase better quality footballers, but at increasing the base cost to the company.

[Danish Saint]

[Minty]

Some quite good points on this thread so far. I'm personally of the opinion that bonuses in general should not be awarded... we are all paid to do a job, and if we don't do our job then you should be performance managed. If rewards or bonuses are to be given they should be based on exceptional performance and/or on an irregular and unexpected basis.

 

There is little difference to an individuals life, in paying them £150,000 or £300,000. Or virtually any figure above that. Personal motivation doesn't increase. Results don't better because you pay someone by an extra factor of 10. In fact, generally, studies show that all that does is increase stress and expectation.

[Wurzel]

Some quite good points on this thread so far. I'm personally of the opinion that bonuses in general should not be awarded... we are all paid to do a job, and if we don't do our job then you should be performance managed. If rewards or bonuses are to be given they should be based on exceptional performance and/or on an irregular and unexpected basis.

 

There is little difference to an individuals life, in paying them £150,000 or £300,000. Or virtually any figure above that. Personal motivation doesn't increase. Results don't better because you pay someone by an extra factor of 10. In fact, generally, studies show that all that does is increase stress and expectation.

 

Of course there is.Would your lifestyle change if your income halved ?

If someone has been earning, say, £300k for the last 5 years they are going to have a lifestyle and commitments that require that amount. It may be a mortgage on a house the likes of you or I could never dream of, or loans for unnecessarily flash cars or holiday homes abroad or big pension payments but then that is the rewards of their status. To say it would have little difference on their life is ridiculous.

(and that's my 3 for the day so i can't combat your inevitable rebuttal)

[Minty]

Of course there is.Would your lifestyle change if your income halved ?

If someone has been earning, say, £300k for the last 5 years they are going to have a lifestyle and commitments that require that amount. It may be a mortgage on a house the likes of you or I could never dream of, or loans for unnecessarily flash cars or holiday homes abroad or big pension payments but then that is the rewards of their status. To say it would have little difference on their life is ridiculous.

(and that's my 3 for the day so i can't combat your inevitable rebuttal)

Sorry, first sentence of that last paragraph gave the wrong impression. The rest is still quite valid though.

 

There is little difference to an individuals job satisfaction, their motivation, their happiness. Yes, of course, people live according to their means and so a 50% reduction in income would obviously make a difference in that regard. However, when it comes to self-worth, and the satisfaction/motivation issue, I do not believe paying someone £150k or £1.5m makes much difference to how well they do the job.

 

If I earned more, I would pay your £5 subscription. ;-)

Edited 24 February, 2012 by Minty

[Gemmel]

I do not believe paying someone £150k or £1.5m makes much difference to how well they do the job.

 

Breathtakingly naive

[CHAPEL END CHARLIE]

Breathtakingly naive

 

The enormous bonuses on offer to investment bankers to engage in risk taking - surprise surprise - encourage exactly that type of behavior, with predictably disastrous consequences when their bets don't pay off. All of which goes a long way towards explaining how we got into this mess in the first place. But it is good to see the banking industry has learnt its lesson re the inherent dangers of the bonus system ..........

 

As for Lloyds losing £3.5bn in the post - well they really should have paid the extra 25p and used recorded delivery.

[Wurzel]

Sorry, first sentence of that last paragraph gave the wrong impression. The rest is still quite valid though.

 

There is little difference to an individuals job satisfaction, their motivation, their happiness. Yes, of course, people live according to their means and so a 50% reduction in income would obviously make a difference in that regard. However, when it comes to self-worth, and the satisfaction/motivation issue, I do not believe paying someone £150k or £1.5m makes much difference to how well they do the job.

 

If I earned more, I would pay your £5 subscription. ;-)

 

Really? Sounds like you're just the person I'm looking for then. 30p an hour, but hey it'll be fun working here

 

£15k would provide me with anything I need £150k would provide me with anything I could ever want £1.5m would provide me with anything I could ever dream of. it would sure as hell make a difference to my self worth and motivation. And like the football analogies above, the best companies want the best men/women for the job, to get them they have to outbid the others. I do agree that some of the huge bonuses paid out recently have been excessive but not in the LloydsTSB case as referred in the OP. None of us know what the targets for the year were, it could well be that despite the big loss (majority of which is from past actions) is much smaller than expected thanks to a good management performance.

 

But please please please don't pay my £5. I can scrape it together myself, non-payment is a deliberate ploy to stop me getting into time consuming discussions like this

[krissyboy31]

Corporate bonuses should be worked out on a percentage of profit. If no profit or worse, a loss is made NO bonuses should be paid.

[pap]

A couple of thoughts on this.

 

First, the salary levels for bankers are ridiculous, particularly when they reached those levels on false pretenses, namely that the economy was going to boom forever and ever, and that these guys were doing the business. As it turns out, they weren't doing a very good job. I am unsure why those salary levels should be sustained, particularly with those banks that are majority-owned by the tax payer.

 

"But pap! You deluded person! We have to pay these guys top whack or they'll go elsewhere".

 

You're probably right, but I have a questions to ask.

 

1) What ever happened to a sense of public duty?

2) Where's the performance related incentive to succeed when bonuses are paid out anyway on the back of massive losses?

 

I'm pretty sure that these bankers have been promised massive things if they manage to drag the country out of the mire, and I have no problem with them getting a massive whack if they pull it off. Cost of doing business. I'm somewhat less enthused about 375M being paid out of the public purse when the ship is still leaking.

[saintbletch]

Corporate bonuses should be worked out on a percentage of profit. If no profit or worse, a loss is made NO bonuses should be paid.

 

Completely agree in principle, but I think the Lloyds' loss was largely due to a special charge for the mis-selling of payment protection many years ago.

 

I read that the underlying profit was something in the order of £2.7B which means that from an operations perspective, employees are contributing to the health of the company and shareholder (us) value.

 

If I were an employee that had delivered the £2.7B, I don't think I would want my part in that reduced due to the decisions of senior management 3+ years ago. The size of the overall bonus pool should however be influenced by the general health of the business - including special charges.

 

All of that said, I do feel that the size of some of the bonuses paid by banks - and particularly the investment side are very unhealthy.

 

But worshipping people and throwing massive amounts of money at them simply because they are the best at exploiting others is unlikely to result in loyalty, and there will always be another bank willing to pay more.

[saintbletch]

A couple of thoughts on this.

 

First, the salary levels for bankers are ridiculous, particularly when they reached those levels on false pretenses, namely that the economy was going to boom forever and ever, and that these guys were doing the business. As it turns out, they weren't doing a very good job. I am unsure why those salary levels should be sustained, particularly with those banks that are majority-owned by the tax payer.

 

"But pap! You deluded person! We have to pay these guys top whack or they'll go elsewhere".

 

You're probably right, but I have a questions to ask.

 

1) What ever happened to a sense of public duty?

2) Where's the performance related incentive to succeed when bonuses are paid out anyway on the back of massive losses?

 

I'm pretty sure that these bankers have been promised massive things if they manage to drag the country out of the mire, and I have no problem with them getting a massive whack if they pull it off. Cost of doing business. I'm somewhat less enthused about 375M being paid out of the public purse when the ship is still leaking.

 

But I'm not sure that the bankers were all 'not doing a good job' (my words). As employees, given the direction from the board, the rabid expectations of the market to continually generate greater returns and the lack of regulation; they did exactly what you would expect them too. And they did it well. Very well.

 

It's the free market and capitalism in the raw pap.

 

They invented ever more complex financial products, split up risk and sold it around the world so that it was impossible to understand exposure to risk, made short bets on the death of 100+ year old companies, exploited 'weak' world currencies, delivered returns, and in the process created a house-of-cards fabrication of assets to back their exposure. It was brilliantly creative and wonderfully 'successful' given the parameters they were allowed to work within.

 

We have to change the parameters they can work within and as you say, we have to somehow force a notion of public duty and responsibility on to management of these organisations. Taking a gong away from Fred Goodwin isn't going make the next bank CEO to think twice about chasing rainbows. Shooting him in front of his family might. But we'll probably have to settle for somewhere in the middle.

[aintforever]

It is just obscene paying bonuses when they can't even make a profit. The whole monetary system is f*cked up. It's just a matter of time before it goes pop.

 

It will go tits up when the US default on their debt, just a matter of time before they just right it all off, **** know what will happen when they do.

 

http://www.usdebtclock.org/

Edited 25 February, 2012 by aintforever

[Thedelldays]

It is just obscene paying bonuses when they can't even make a profit. The whole monetary system is f*cked up. It's just a matter of time before it goes pop.

 

It will go tits up when the US default on their debt, just a matter of time before they just right it all off, **** know what will happen when they do.

 

http://www.usdebtclock.org/

to be fair.....do saints make a profit...yet I bet all the players got another bonus today on top of their wage....!!

[aintforever]

to be fair.....do saints make a profit...

 

probably

[Pugwash]

But I'm not sure that the bankers were all 'not doing a good job' (my words). As employees, given the direction from the board, the rabid expectations of the market to continually generate greater returns and the lack of regulation; they did exactly what you would expect them too. And they did it well. Very well.

 

It's the free market and capitalism in the raw pap.

 

They invented ever more complex financial products, split up risk and sold it around the world so that it was impossible to understand exposure to risk, made short bets on the death of 100+ year old companies, exploited 'weak' world currencies, delivered returns, and in the process created a house-of-cards fabrication of assets to back their exposure. It was brilliantly creative and wonderfully 'successful' given the parameters they were allowed to work within.

 

We have to change the parameters they can work within and as you say, we have to somehow force a notion of public duty and responsibility on to management of these organisations. Taking a gong away from Fred Goodwin isn't going make the next bank CEO to think twice about chasing rainbows. Shooting him in front of his family might. But we'll probably have to settle for somewhere in the middle.

 

Excellent post SB. Entirely reflects my thoughts on the whole subject of what's currently wrong with banking and capitalism - only put more succinctly and eloquently than I could have done. Must be all those books you read.

[Minty]

Breathtakingly naive

Well I don't think so, there's a lot of good research and info out there to support the notion. If people need that much money to motivate them, there is something wrong with their life. It's also a sad indictment of modern life IMO. But each to their own.

 

£15k would provide me with anything I need £150k would provide me with anything I could ever want £1.5m would provide me with anything I could ever dream of. it would sure as hell make a difference to my self worth and motivation.

Well we're all different, but the day my self worth is governed by my pay packet is a sad one IMO.

 

And like the football analogies above, the best companies want the best men/women for the job, to get them they have to outbid the others.

I recognise that within the current system, that is a fair statement. I just disagree with the system.

 

Rates of pay like this just don't sit well with me from a moral point of view. I wouldn't want to earn it, but if I did, a large portion of it would go elsewhere, supporting charities, community initiatives etc. That's just me. But I strongly believe that if people were less selfish and looked out for those less fortunate, especially when in a position to do so, the world would be a far, far better place.

Edited 26 February, 2012 by Minty

[saintbletch]

Excellent post SB. Entirely reflects my thoughts on the whole subject of what's currently wrong with banking and capitalism - only put more succinctly and eloquently than I could have done. Must be all those books you read.

 

Aww, I'm blushing Cap'n.

 

You shouldn't read books - they give you ideas!