Caps on Banker's bonuses - Devil is in the Detail

When Gordon Brown tries to garner support for a limit on banker's bonuses one is reminded that talk is cheap. But the devil is in the detail: who decides? what is the right amount of bonus? what will be the side-effects? (certainly an increase in base pay, if not in other fringe benefits)What is a bank? If payment is regulated at banks, will people and business not migrate to other areas of financial markets like brokers, investment banks and hedge funds? (not to mention the likely migration to emerging financial centres that are outside the global G2/G7/G10/G20/OECD cartel?

Welcome to the Inquisition

Trying to find the right candidate for any position is a difficult and arduous task in the best of times. The same can be said about the problems candidates face when looking for a new job. Things (nearly always) take longer than expected and we often remind both parties in the recruitment process that nothing is done until someone actually sits on a new chair. (And sometimes even that is premature as we have seen new appointees quitting after a short time). So the news that the FSA is putting extra emphasis on vetting the appointment of senior staff is going to complicate things further. What experienced professional will be happy to be subjected to a detailed and bureaucratic grilling by people he will rightly consider to be professionally inferior bureaucrats? So far we have not seen what criteria the FSA is applying during this vetting process and as it will forever be shrouded in secrecy confidence in the procedure will never be established. Firms where appointments are subject to this interference will be at a competitive disadvantage in the future, In addition, this is just another step on the paths towards the reduction of London as a financial centre.

Lessons from Dresdner Kleinwort fiasco

The news that three more former employees are suing Commerzbank for the payment of allegedly promised bonus payments should serve as a reminder of the dangers of trying to build a financial services business by putting together a collection of senior professionals. The danger of the winner's curse that threatens the success of many a corporate takeover is a real threat. Staff that is hired too expensively is a drag on profitability and may also dampen the team spirit as those employees of less favorable terms might resent being in a second tier in terms of pay and job security. Cobbling together professionals with disparate backgrounds will never be a substitute for a corporate culture that has developed organically. As a consequence while we do recommend selective hiring of senior professionals to fill gaps in an organisations managerial line-up we strongly advise clients not too neglect the systematic development of their existing staff.