4 Mar 2013

Beware a referendum on bankers

Be careful what you wish for. You can never be sure what a referendum will deliver you. So it is with the land of the cuckoo clock and the secret bank account.

Offered the chance to bash a banker, Swiss voters have gone most of the whole of the way.

With their guns safely in their cupboards the Swiss have responded to a referendum on curbing bankers’ powers with several regulations that British customers can only dream of. A perhaps unsurprising 68 per cent of Swiss voters have voted to give shareholders a binding right to set and regulate executive pay.

Companies will not be allowed to deploy golden “hellos” or “goodbyes” to arriving and departing executives. And the full force of the criminal law will be visited upon any company breaking the new laws.

Swiss anger

The vote is the most positive “yes” result any referendum in Switzerland (and there have been many), has ever secured. The referendum followed an attempt by the Swiss pharmaceutical company, Novatis, to give its former chairman a more than £50m pay off upon leaving the company.

The attempt was, eventually, abandoned.

Swiss anger at corporate remunerative excess comes on the heels of Europe’s moves to tie bankers’ bonuses to no more than the size of an individual’s salary.

Poor old Britain, more dependent upon banking and financial services than more or less any other developed nation, is left even further out of step. The idea that the notoriously secretive Swiss gnomes should now be more retrained than their UK counterparts is bad enough.

But add it to this the current determination of the coalition government to battle for opt-outs from EU rules tightening bankers’ bonuses and pay, and Britain is suddenly severely out of step not only with Europe but also with its own public opinion.

UK referendum?

The government, so keen to test public opinion on Europe, would never brook such a test of public attitudes to banking remuneration and working practices in the UK. The Swiss have often been ridiculed for their love of referenda. Not any more.

Britain’s planned “curbs” on the City now look weak in the face of what is happening elsewhere and do not yet appear to go as far as the Swiss in deploying the criminal law. Ministers, desperate to protect 17 per cent of UK GDP in these straightened times, find themselves battling not only the anger of their own voters over the behaviour of banks and bankers, but the EU – and now even Switzerland too.

Mind you, let’s not lose our heads. How many chairmen, CEOs, directors of western Europe’s swathe of disgraced banks are yet behind bars? Don’t hold your breath. So far, unless you can put me right, it’s a couple in Germany, a few more on the run from Ireland and that’s about it.

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13 reader comments

  1. Pat McClay says:

    Two Icelandic bankers have also been jailed.

  2. Angus Sutherland says:

    Does this mean that Switzerland is crossed off the list of countries the allegedly super high performing bankers can flee to if constraints are placed on them in Britain? The boast that they can ship out for richer easier pastures any time they want has always seemed empty. Even if they were established on a Caribbean island somewhere, the large nations and power blocs could sanction them. Anyhow could such a notional haven afford to prop them up when they next go bust? So it is a matter of which of the big players, USA, Europe (including Britain and Norway), Russia, China, India, Brazil or perhaps some oil rich Arabian country would break ranks to offer them a viable base. Britain looks like the only candidate on current showing. This gives Britain the opportunity to apply maximum pressure on the bankers. I believe that the sequestration of some of the criminally excessive bonuses should be on the agenda. However the British government is bought and paid for by bankers so that is not going to happen.

  3. Philip says:

    And there was that guff about “rebalancing the economy”. With manufacturing output down, exports down & bank lending to businesses down, while bankers retain their bonuses & HSBC makes vast profits, we can see how well it’s working. Perhaps they shouldn’t try to “re-balance” – they couldn’t do any worse.

  4. margaret brandreth-jones says:

    i wouldn’t say no to a golden hello…The performance after that wouldn’t be too important .If I survived for a couple of years my golden handshake would be very welcome.Bankers!

  5. Jon Wood says:

    Boris, Dave and others have misrepresented the EU measures as a cap on bankers’ pay – it is nothing of the sort. If the going rate is £1m salary and potentially £9m bonus (I have no idea), that would have to change to £5m salary and a mere £5m max bonus. Firms might be a bit more circumspect about who they hired if they still had to pay a shedload even if they had a duff year, individuals might be slightly less reckless in the search for profit and the upshot should be slightly less chance of the next in a long series of financial meltdowns. Banks are trusted with immense power when they are allowed to trade – basic conditions on how they go about their business are a fundamental necessity. The scenario where everyone strives to have slightly less regulation than everyone else is something there is plenty of history we need to learn from, and instead reach for a sensible universal consensus.

  6. sue_m says:

    UK govt wants to opt out of EU regulations on bankers bonuses, UK govt wants to opt out of EU protection for workers, UK govt wants to opt out of human rights laws.

    I think we know who the UK govt is looking after, and it’s not the hardworking British public. Sooner we vote out of this bunch of arrogant incompetents the better. Britain is shamed by them and their feeble excuses for protecting their own paymasters at the expense of everyone else.

    1. Meg Howarth says:

      Nicely put, Sue!

      And a neat piece here – ‘Bailout funds favour bankers’

      http://www.theage.com.au/business/bailout-fund-does-the-big-banks-plenty-of-favours-20130306-2flms.html

      But to throw a stone into the smooth pond of justifiable widespread public anger against bankers’ bonuses, not to mention Libor manipulation/other fraudulent practices – it’s interesting that we rarely raise an eyebrow at the unearned ‘rentier’ income that accrues from the UK’s obscene property-price inflation, otherwise known as house-price rises. In London, this has seen prices in some areas increase ten+ fold. People in expensive houses shouldn’t throw too many stones!

  7. Bob says:

    What is it these days? Banking, weapons manufacturers and energy companies.
    That’s who really rules the world. If you can see through the media there is an unseen hand running every government because of global economics and terrorism. That’s where intelligence comes in to play. It’s sad to think our politics works in this way but unfortunately people believe what they are told rather than assimilating the reality of the situation we live in. The bankers own the law and for many of us the ‘curbs’ or ‘kerbs’ are something to climb to survive. We can run cars on water. This is the era where we need a new big idea to redefine our industrial marketplace, something more evolved than the digital world, a new game changer. God only knows…

  8. Philip Edwards says:

    Jon,

    In Afghanistan two bankers have been jailed for organised fraud and “almost bringing down the national economy.” The country is rotten with corruption.

    Seems they learned Western capitalism and its “freedoms” very quickly indeed.

    Meanwhile, here in Europe and the USA the same type of cheap hoodlum is paying themselves millions which they say is “a reward for success.”

    In Britain, bonuses are still being paid to thieving scum who should be rotting in jail.

    And still gutless mainstream media allows the crooks in Downing Street and in Westminster to gibber on about “public debt” and to attack and privatise the NHS.

    It is impossible not to feel utter contempt for those who manufactured such a lying, hypocritical, cowardly culture. And that is what will be left to your children. How sad.

  9. Philip Edwards says:

    Jon,

    ADDENDUM:

    Reports today indicate Georgie (Osborne) Boy is resisting EU moves to cap bankers’ bonuses.

    No suprise there, then.

  10. David says:

    This shows why the Swiss system is so good. I wish we could have referendums when we wanted.
    Although I don’t understand why Jon believes this
    “The government, so keen to test public opinion on Europe, would never brook such a test of public attitudes to banking remuneration and working practices in the UK.”
    We are not having a referendum for years on the EU and unlike the Swiss one the question will be written by the Government.

    1. Mudplugger says:

      The key difference is that the Swiss live in a democracy.

  11. Anne Marigold says:

    Just a note that if bankers get share options instead of cash then any children not living with them for whom they pay maintenance will not benefit as they would with the cash. Qell not at the time anyway.

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