Posted on 09/16/2009 5:02:25 PM PDT by bruinbirdman
A group of 45 bankers at Barclays yesterday bypassed potential curbs on pay and bonuses by jumping ship to set up a Cayman Islands company and manage $12.3 billion of Barclays’ most toxic debt. They will be paid at least $400 million over ten years (see Commentary, facing page).
In an exotic piece of financial engineering, the bank will lend $12.6 billion to Protium, a newly created Cayman Islands-registered hedge fund, to buy the toxic assets.
The bankers, led by Stephen King and Michael Keeley, both British, are setting up C12 Capital Management, a management company that will be paid management fees of $40 million a year for a decade by Protium and could make much more if the impaired assets recover in value.
While staff at large investment banks such as Barclays could be crimped by new curbs on bankers’ pay being considered by the G20 nations, C12, a small asset management boutique based in New York, almost certainly would not.
Traders in other investment banks are also quitting before any crackdown. About 20 leading bankers at Société Générale left this week to set up Nexar Capital hedge fund, amid the threat of pay curbs by President Sarkozy of France.
Some of the Barclays bankers appear to have been involved in the activity that led to the banking crisis and Barclays’ losses in the first place: creating and trading mortgage-backed securities. Mr King was head of synthetic asset-backed security collateralised debt obligations at Barclays Capital in 2007. However, Chris Lucas, Barclays finance director, insisted that most senior people responsible for the losses had already left.
Barclays said the deal would soften the impact on the bank if the toxic assets fell further in value and would deliver more stable returns. Protium will pay it interest of dollar Libor plus
(Excerpt) Read more at business.timesonline.co.uk ...
Nice job. Big money. Oceanfront homes. Good looking girls. It sure pays to be a criminal.
For instance, let's say a conglomerate is being sued for toxic waste cleanup at a waste site. The company might spin off the division responsible, along with the waste site and its liabilities. It compensates shareholders with proportionate share value.
That spin-off might turn out to be lucrative or it might go bankrupt. At least it won't take down the entire conglomerate.
yitbos
Maybe so, but these cretins knew they were selling garbage. I was in banking 30 years.
Now I understand the next global war.
Looks like the FDIC authorized setting a 70 cents on the dollar pricetag on toxic wastes?
yitbos
I wouldn’t do it for that.
“Capital goes where it’s wanted, and stays where it’s well treated.” —Walter Wriston
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