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The world’s stock markets lost more in a single week in October 2008 than at any time since the Great Crash of 1929. Mervyn King, the Governor of the Bank of England described the banking crisis as ‘unprecedented in the lifetime of almost all of us’. Furthermore, he said: 'It is difficult to exaggerate the severity and importance of those events. Not since the beginning of the first world war has our banking system been so close to collapse.'



The contagion that began with the US sub-prime crisis is having an impact across the world with inflation and unemployment rising in many countries and millions losing their homes in the USA and elsewhere. As Nobel Prize-winning economist Joseph Stiglitz has pointed out: 'Banks are reporting record losses, only months after their executives walked off with record bonuses as their reward.'



This short paper examines the pay and bonuses of Chief Executive Officers (CEOs) in a selection of the major world banks. In unprecedented action, governments have pumped billions into the finance sector, nationalised banks and many of the others have merged, disappeared like Lehman Brothers and Bear Stearns or been acquired by competitors. The process began with the UK Government taking over Northern Rock, then the US Government nationalised Freddie Mac and Fannie Mae. In a few short weeks there was a wave of transactions: JPMorganChase bought what was left of Bear Stearns, Bank of America snapped up Merrill Lynch, Mitsubishi UFG Group agreed to take a 10-20 per cent stake in Morgan Stanley, Allianz sold Dresdner to Commerzbank, Barclays bought Lehman Brothers North American investment banking and capital markets businesses while Nomura bought is Asian operations, Citibank and Wells Fargo fought to buy Wachovia, Lloyds have agreed to take over HBOS, and ABN AMRO - now owned by RBS, Santander and the Dutch government (having replaced Fortis in the consortium, Fortis itself taken over by the Dutch, Belgian and Luxembourg Governments) - is being broken up and integrated into its owners’ operations or sold off.

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