eFinancialCareers

In the latest installment of his regular “View from the Top” series, our columnist takes a swipe at banks that cut bonuses only to replace them with retention-inducing pay hikes.

The author is a senior banker based in Singapore, with three decades in commercial and investment banking at major international firms.

Corporate greed has reared its ugly head again. No painful lessons have been learnt from the financial crisis, and it appears that we are rapidly heading back to a mass orgy of super salaries in banking.

However, in many cases, these high wages now come at the expense of tax payers, rather than shareholders.

Many Wall Street bosses must believe that tax payers are stupid people who can be fooled by a simple play of words. This clearly shows their disrespect and condescension towards all members of the public.

When they were in need, the banks cried out loudly and pitifully for help and demanded bailouts again and again from the US Government, citing strong reasons such as systematic risk and economic ruin for many industry players.

And to add salt to the wound, the public then found out that these same executives were enjoying many years of super bonuses, the amounts of which are equivalent to lifetime incomes for many ordinary Americans.

Unbelievably, these bonuses were guaranteed and paid regardless of whether the firms they worked for were bankrupt or totally reliant on bailouts to survive.

Now after all the public anger, apologies and promises not to abuse public funds ever, ever again, these same firms are back to their merry ways.

However, god forbid that they call their plans a “guaranteed bonus”. It’s now become an annual basic wage, but of course a substantially higher (40 to 50 per cent more) one, payable as long as the banker is still employed and paid regardless of performance. Wow, such a sweet deal for employees!

And the worst thing is that these firms may actually get away with this.

The story spun by the banks is quite simple. Big banks need to retain their top talent and ensure loyalty because they are not able to find new high performers in the market. They must also pay more to their existing staff, otherwise some other crazy firm will poach them. And new talent costs a lot more, so they say.

But logically we all know that unemployment is at historical record high levels and very few firms are actually hiring new employees. We also know that there is less risk-taking happening, and lending and other activities in banking and finance have also slowed down considerably. We also know that there are fewer banks around.

From my position here in Singapore, I sincerely hope the US legislature finally puts a stop to this orgy of corporate greed. But unfortunately, I think these firms will get away with it in the end. Nothing ever really changes on Wall Street, and the rest of the banking world will probably follow its lead into super salaries.