Why is Bob Diamond being grilled over his bonus?

dowie said:
... they wouldn't have made any profits if it wasn't for the tax payer....
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You cannot say that for sure. Barclays did not take UK government money therefore morally speaking there is nothing wrong with them awarding executives as they see fit.

You could also argue that Bobs Skip Hire might not have made any profit had it not been for the bank bailout, is Bob not allowed a bonus either?
 
dowie said:
its not conjecture at all to state that they tried to buy ABN...
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My point is that you can 'what if' until the cows come home. Part of business is luck. You can't punish someone because they were lucky in some aspects.

'Lol Bob, imagine if you'd won that ABN bid. You'd be screwed right now so you're not getting your bonus.'
 
toshj said:
Dowie, you've made pretty valid points so far, but are you really suggesting that due to an investment bank sourcing external investment to make it's balance sheet and asset base more healthy and taking advantage of improved liquidity in the market, the CEO should forego a bonus?

Regardless of political implications they need to act in the interest of their shareholders. Paying the CEO a decent bonus for steering them away from nationalisation can't be deemed a negative thing surely?
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IMO for the sake of the sector in the long term CEOs should avoid negative publicity for the next year or two. It really isn't a good climate to be paying huge bonuses to C level staff. Barclay's very nearly ended up like RBS and it wasn't thanks to the senior management that they didn't. We've already had knee jerk legislation and there is still plenty of anti banking political rhetoric someone in Diamond's position should probably still take a hit in order to avoid antagonising the situation further.
 
dowie said:
IMO for the sake of the sector in the long term CEOs should avoid negative publicity for the next year or two. It really isn't a good climate to be paying huge bonuses to C level staff. Barclay's very nearly ended up like RBS and it wasn't thanks to the senior management that they didn't. We've already had knee jerk legislation and there is still plenty of anti banking political rhetoric someone in Diamond's position should probably still take a hit in order to avoid antagonising the situation further.
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That's a tactical decision for Barclays though, not for the politicians.
 
OldCoals said:
You do realise that private investors give Barclays money for them to invest on their behalf?
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Next you'll be telling me that their retail branches let people open accounts and give them little plastic cards so they can take money out from machines built into walls....
 
Robbie G said:
That's a tactical decision for Barclays though, not for the politicians.
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Yes it is - but it isn't inappropriate for politicians to ask questions and given the current climate it would be a bit silly for Barclay's to not tread carefully in this area.
 
Robbie G said:
That's a tactical decision for Barclays though, not for the politicians.
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Hmm not really. It is politically convenient for politicians of all parties to keep pulling bankers in front of committees to take some flak. It keeps up the whole "it was the banks what done it" argument going. All politicians try to use this to justify what they have/are doing. I think it's called 'misdirection'.
 
It's all the bankers fault, lets bash the bankers!

Meanwhile, nobody notices as slip yet more pennies on fuel duty and we continue to get owned on all imported products due to the ridiculously low interest rates, where were we? BOOO!! DOWN WITH THE BONUSES!
 
Pudney@work said:
Why not? They raised the capital they required through external financing. They may well have weathered it quite well, possibly even profited from it. How do you know what would have happened?
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What do you think would have happened to all their assets at the counterparties that would have failed had the govt not stepped in?

Swaps, money market loans, credit derivatives etc.. are OTC products - there isn't some magic clearing house that can step in. They're not worth anything if your counterparty defaults.
 
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brainchylde said:
Hmm not really. It is politically convenient for politicians of all parties to keep pulling bankers in front of committees to take some flak. It keeps up the whole "it was the banks what done it" argument going. All politicians try to use this to justify what they have/are doing. I think it's called 'misdirection'.
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Sorry where have you disagreed with my statement? You're commenting on political motivations, not whether they're appropriate or not. Of course it's convenient to drag bankers over the coals. Question is whether or not it's right to do so.
 
dowie said:
IMO for the sake of the sector in the long term CEOs should avoid negative publicity for the next year or two. It really isn't a good climate to be paying huge bonuses to C level staff. Barclay's very nearly ended up like RBS and it wasn't thanks to the senior management that they didn't. We've already had knee jerk legislation and there is still plenty of anti banking political rhetoric someone in Diamond's position should probably still take a hit in order to avoid antagonising the situation further.
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I completely understand your argument, I just don't think barclays would really care. Firstly its not a huge amount when looking at what the CEO's of the US banks were taking prior to 2007 and BD has waived his bonus for the last two years.

Although he's obviously received quite a bit in previous performance related monies and the bgi sale, its probably about time he got rewarded for staying clear of succumbing to the pressures and pitfalls of the tricky markets over the last 3 years
 
dowie said:
What do you think would have happened to all their assets at the counterparties that would have failed had the govt not stepped in?

Swaps, money market loans, credit derivatives etc.. are OTC products - there isn't some magic clearing house that can step in. They're not worth anything if your counterparty defaults.
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True, but then Barclays aren't a UK company, they're a multinational. Now I have no idea how much of Barclays assets are interwoven with RBS/Lloyds etc, but I do know that they will have assets interwoven with other major US, French, German, Japanese, and Chinese institutions. So the question is, if RBS/Lloyds defaulted would they have enough elsewhere. I'd probably say yes given their international presence.

So I say again, how can you be so sure?
 
Pudney@work said:
True, but then Barclays aren't a UK company, they're a multinational. Now I have no idea how much of Barclays assets are interwoven with RBS/Lloyds etc, but I do know that they will have assets interwoven with other major US, French, German, Japanese, and Chinese institutions. So the question is, if RBS/Lloyds defaulted would they have enough elsewhere. I'd probably say yes given their international presence.
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It wasn't just RBS and Lloyds that were in trouble and a lot of those large foreign owned institutions had to resort to bailouts from their respective governments (though yes Barclay's as a UK bank would have had huge exposures to other large UK banks not to mention all the institutions that could have failed had RBS, LLoyds, Northern Rock been allowed to fail).
 
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