Britain’s army of bankers will re-ignite public fury over lavish pay rewards as staff at Goldman Sachs are expected to reward themselves £8.3 billion in bonuses on Wednesday.
The American investment bank, which employs 5,500 staff in the UK, will be the first to unveil its telephone number-sized rewards – an average of £250,000 a person – as part of the latest round of bonus updates.The increase, up from £230,000 last year, comes as British families are still struggling to make ends meet five years after banks brought the economy to the brink of meltdown.Calls for restraint by politicians, who have used taxpayers cash to bailout many of the banks, have fallen on deaf ears.
At taxpayer-backed Lloyds Banking Group, which is expected to make a loss this year, its boss is likely to be entitled to a multimillion-pound bonus.Some of the reward for chief executive Antonio Horta-Osorio is linked to the share price, which has doubled, and customer satisfaction, which means he could be in line for a £4.4 million fortune.But most of the anger will be directed at Goldman Sachs whose vice chairman said back in 2009 ‘inequality is a way of achieving greater opportunity and prosperity for all’.
The comments by Lord Griffiths echoed those of fictional banker Gordon Gekko in the film Wall Street – whose mantra ‘greed is good’ came to sum up the excesses of the 1980s.Griffiths was of the view that taxpayers should ‘tolerate the inequality’ and insisted banks should not be ashamed of rewarding staff.True to this ethos Goldman is likely to have boosted its salary and bonus pot to £8.3 billion from £7.6 billion the previous year due to increased profits.
The last three months have been strong with share trading and bonds performing well.Global profit could top £3.79 billion up from £2.73 billion.The lavish windfalls come as new research shows pay rewards are failing to incentivise Britain’s big bosses to improve the long term success of their businesses.Executive pay packages across Britain’s biggest firms are ‘overwhelmingly’ linked to short-term financial measures such as earnings and share price movement, according to research from the High Pay Centre lobby group.
However it shows chief executive pay has trebled to £4.8million, on average, in ten years without any accompanying long-term increase in share values.At Lloyds, the bank has experienced a short term stock rise, but given the political tensions over banking bonuses, the Lloyds directors may decide not to pay the full amount to the Portuguese banker, who last year waived his bonus following a prolonged period of sick leave.
Lloyds shares were the second best performing of Europe’s banks last year and closed last week at 54p, up from 25.5p in May.But the bank is still expected to make a full year loss of about £1.4 billion, as it continues to suffer from bad debts from corporate loans and a big bill over the mis-selling of payment protection insurance.The 40 per cent state-owned lender was pushed to a £144 million loss in the three months to 30 September, as it took an additional £1 billion charge for dealing with the scandal, taking its total to £5.3 billion.Lloyds froze basic pay for 500 senior staff for the third year in a row on Friday. – DailyMail