Bank bonuses hard to justify!!

An announcement by the major Canadian Banks regarding bonus payouts should come as no surprise. The bonuses this year are expected to set a new record for the industry totalling $8.3 BILLION. This after these same institutions who came crying to the government a little over a year ago that they needed to be bailed out to the tune of $25 billion in order to stay competitive. This is nothing short of thumbing your nose at the Canadian Taxpayer and rubbing in the fact, that the entire industry is manipulating the Politicians with talk of all the dire consequences if they are not appeased. Tax payers globally should be out raged by the arrogance of the management in this industry.




The banking industry in Canada is one of the most stable globally but it has very little to do with the industry itself but everything to do with the protective environment they operate in. There is very little competition due to legislated restrictions on foreign operations in the country. This has insulated the Canadian financial services sector from the turmoil seen in other countries. These legislated restrictions have an inordinate positive impact on the profitability of Canadian financial institutions. By the same token Canadian companies trying to raise capital are limited by this legislation as well.



The lack of foreign competition in Canadian Capital markets has allowed for a very stable and profitable financial services industry to develop. For shareholders to allow bank management to take all the credit and pay themselves as though they alone were the reason for the dramatic turn around in profitability seems to me to be a bit far fetched and stretches the credibility of the industry.