Industry | 2010.02.26
Letters: Despite the mistakes, we need bankers
The letter (26 February) from a group of academics, politicians and union leaders made the point that the short-term interests of the finance sector must never be allowed to come before the needs of the wider UK economy and society as a whole. I could not agree more. The entire financial services industry recognises that major mistakes have been made, there are serious lessons to be learnt and substantial changes need to be implemented.
It has also been widely accepted that a new regulatory structure is necessary and that UK taxes on businesses and higher earners will have to rise if we are to tackle the huge public deficit we are facing. However, the implications of these policies must be carefully considered against a global backdrop. Financial services already make a huge contribution to the wider UK economy and society: not only do they provide 12% of this country\'s total tax take, but they also employ more than a million people, attract billions of pounds of investment from overseas and provide a wide range of necessary products for which most of us have some need during our lifetimes, as well as supplying the capital for new entrepreneurs and businesses across the economy to develop and grow.
These benefits could easily be diminished if we unilaterally pursue the policies suggested, instead of building a consensus among our international competitors, many of whom are facing similar issues, especially in the US and the EU. We cannot afford to place our international competitiveness in jeopardy by implementing tax and regulatory proposals that risk driving top City firms and hence the provision of the financial services and products we need, to more welcoming business environments overseas. This will only damage the UK economy by making the raising of capital for new businesses more difficult, as well as raising its price and by reducing our tax revenues and employment prospects.
Stuart Fraser
Chairman, policy and resources committee, City of London Corporation
• The letter from Helena Kennedy and others confuses remuneration in the banking industry with that in private equity. The private equity remuneration model is entirely different. Private equity fund managers are only rewarded after an investment is successfully sold and the actual cash return has been handed back to investors – usually pension funds and other institutional investors.
There are no share options, "shadow options" or bonuses based on theoretical returns. Firms are remunerated on cash paid out. Private equity does not reward failure. The reference to private equity houses as "the riskiest and shadiest financial operators" is equally facile. Buy-out investments are ring-fenced. If one fails, it has no impact on others. The 400 workers at Red Driving School, for example, whose jobs were saved by private equity intervention this week, would take a different view. So would the residents of Darwen, Lancashire where 1,300 workers at Crown Paints would be on the dole without private equity investment.
Simon Walker
Chief executive, British Private Equity and Venture Capital Association
• As Scotland\'s largest financial services employer, the Lloyds Banking Group are a substantial investor in Scotland\'s communities. We are, and we will continue to be, one of the country\'s largest corporate donors. That is why we have recently outlined plans to establish a Bank of Scotland Foundation, which will in due course become the group\'s sole community investment vehicle in Scotland, providing grants to Scottish charities and supporting colleague fundraising.
It is with great regret that following negotiations with the Lloyds TSB Foundation for Scotland, the group has given notice that it is ending this relationship. This means our funding of the Lloyds TSB Foundation for Scotland will end in nine years\' time. The foundations for England and Wales, Northern Ireland and the Channel Islands have already agreed on a new and expanded relationship on the same terms that we have offered Scotland. We are open to an accommodation with the Scottish Foundation, if the trustees decide to accept the same arrangement as the other foundations.
Shane O\'Riordain
Group communications director, Lloyds Banking Group
For more information, please visit
http://www.guardian.co.uk/business/2010/feb/27/mistakes-but-we-need-bankers
Instagram is adding automatic in-app text translation - The Verge views: 1529
Here’s a ‘Brand-New’ Massive Multilingual Dataset for Machine Translation views: 1526