From the Cardigan, news that the credit crunch hasn’t hit the bosses…
Bob Diamond, the US banker who runs Barclays’ investment banking arm, has cemented his position as one of the highest paid bosses in a FTSE 100 company after receiving almost £36m last year.
The figure comprises £21m in cash, bonuses and shares in addition to £14.8m from a three-year performance plan.
The £21m includes his £250,000 base salary, £6.5m cash bonus, a £11.3m share award held in a trust for three years and £3m of shares which will be received in three years provided performance criteria are achieved. The sum is down slightly from the £22m in 2006.
But his total is boosted by the £14.8m “retained incentive opportunity” – half in cash, half in shares – put in place three years ago when he joined the Barclays board. He received the sum because profits at the investment banking division Barclays Capital exceeded targets – despite the US sub-prime mortgage crisis.
Whatever happened to wage restraint – or does that only apply to teachers, nurses, firefighters, and police officers?
The article continues:
Diamond is one of the highest profile bankers in the City and last year topped the Guardian’s annual boardroom pay survey. He came out ahead of Bart Becht, £22m boss of Cillit Bang maker Reckitt Benckiser, and Giles Thorley, of Punch Taverns, who earned £11m in 2006.
Diamond achieved the bonus even though Barclays took a £1.6bn hit from the sub-prime crisis in the US and despite ongoing financial woes which have seen billions wiped off share values worldwide. The bank’s profits in 2007 were £7bn, the same as 2006, and its share price has suffered.
And the central banker, King Merv (as he isn’t known) has been talking about how he – sorry, we – will come to the rescue of the markets, intervening on the side of big business…
“The heart of the problem is not in the real economy; it is in the financial sector itself,” King said in testimony before a House of Commons committee. “It stems from an ‘overhang’ on banks’ balance sheets of assets in which markets have closed. These assets cannot now be sold or used to secure funding in the market — they are difficult to finance.
“That has created uncertainty about the strength of banks’ financial positions,” King said.
King said the bank would continue to provide liquidity to money markets. Emergency loans, however, can only provide temporary help, he said, which is why the bank expanded the range of eligible collateral to include mortgage-backed securities in its three-month lending operations in December, January and March.
So what he’s saying is that, as the banks hoard cash and tighten lending to working people, the Bank of England is going to reward them for their mendacity?
The governmment’s emergency nationalisation of Northern Rock was on the basis of legislation allowing other banks to be bailed out – for that’s what it is, Northern Rock’s employees are threatened with compulsory redundancies so they’re not benefiting – it could be that more banks like the Rock, and Bear Stearns in the US, are rescued just as the credit crisis hits working people.
In America, home repossessions are at the highest level since the Great Depression. The government there will intervene in the economy – but not to stop working people being turfed out of their homes. And when repossessions rise on this side of the pond, the government here will be intervening – to rescue those doing the repossessing, not to help familes facing eviction.
The lesson to be learned for working people is that political power must be taken first from New Labour and then from the bankers and big businessmen. For if they are left to deal with the ongoing economic crisis, we will pay dearly – with our homes and our jobs…