What is the plural form of bonus?

The Guardian on its front page on 1 November: Rescued bank to pay millions in bonuses.

Royal Bank of Scotland, which is being bailed out with £20bn of taxpayers' money, has signalled it is preparing to pay bonuses to thousands of staff despite government pledges to crack down on City pay.

The bank has set aside £1.79bn to cover "staff costs" - including discretionary bonuses - at its investment banking division for the first six months of the year alone. The same division caused a £5.9bn writedown that wiped out the bank's profits for the same period.

The government had demanded that boardroom directors at RBS should not receive bonuses this year and the chief executive, Sir Fred Goodwin, is walking away without a pay-off. But below boardroom level, RBS and other groups are preparing to pay bonuses to investment bankers who continue to generate profits.

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Several US politicians have seized on an investigation by the Guardian last month which showed six Wall Street banks - Goldman Sachs, Citigroup, Morgan Stanley, JP Morgan, Merrill Lynch and Lehman Brothers - had set aside $70bn (£42.5bn) in pay and bonuses for the first nine months of the year.

Five are in line to benefit from a $700bn US taxpayer bail-out. The sixth, Lehman Brothers, has collapsed - though not without securing considerable bonus payouts for staff in the US.

Quoting Vince Cable, economics spokesman for the Liberal Democrats in the UK: "A complete laissez-faire environment is disastrous". This statement sounds completely at odds with the neoliberalism dogmas awkwardly imported from the US to Europe, primarily by second-row politicians.

Meanwhile, Barclays, second UK's biggest bank, has turned to Middle East investors to bolster its balance sheet and to avoid taking funds from the United Kingdom government’s rescue package. Barclays is raising up to £3.5 billion as a personal investment from HH Sheikh Mansour Bin Zayed Al Nahyan, a member of Abu Dhabi's royal family. Barclays has also turned to sovereign wealth fund Qatar Holding, which will invest £2 billion and has subscribed for warrants to purchase a further £1.5 billion of ordinary Barclays' shares with a fixed price of 197.775 pence per share at any time for a five-year term from the date of issue. Challenger Universal, owned by Sheikh Hamad Bin Jassim Bin Jabr Al-Thani, the chairman of Qatar Holding, will invest a further £300 million.
If all the warrants issued are exercised, Sheikh Mansour will end up with a 16.3 per cent stake in Barclays while Qatar Holding will have 12.7 per cent and Challenger Universal will hold 2.8 per cent of the bank.

Barclays has chosen therefore a different route as the one taken by RBS, Lloyds TSB and HBOS, which on the one hand makes it possible to avoid a ban on executives' bonuses, paying dividends and a demand to increase lending to small business and would-be home owners. On the other hand, the deals are not cheap for the bank and the existing common shareholders. The deal hinges on two main financial instruments: on part of the new funds it will be paying interest at a 14% rate for 10 years on reserve capital instruments dated June 2019 – the highest rate any bank has had to pay for capital- and on the other part it will pay quarterly an annual 9.75% interest rate for mandatorily convertible notes. RCIs are a financial instrument which was authorised as Tier Capital 1 -i.e. capital that together with the shareholders' equity conforms the bank's financial strength from a regulator's point of view- by the Financial Services Authority (FSA), the British financial services industry regulator, based on the Basel Accords, which we will discuss in a later post here in this blog. They are similar to preference shares and carry a coupon of 14%. If this interest cannot be paid, the issuer does not necessarily default: this "fixed dividend" accumulates from year to year. The MCNs will convert into Barclays ordinary shares at a price of 153.276 pence, a discount of 22.5% to the Average Barclays Closing Price. The HM Treasury would have bought the new shares at just above 189p per share and the coupon for preference shares would have been 12%. One important difference lies in the fact that RCIs are tax deductable, whereas a deal with the government would not be. Even if the deal with Abu Dhabi and Qatar seems cheaper under this perspective, it has undermined the important pre-emption rights of existing shareholders as they are only allowed to buy £1.5 bn MCNs out of the total £7.3 bn of the capital raising, and even so you had to be an institutional investor, namely a bank, an insurance company, a retirement or pension fund, a hedge funds or a mutual fund. However, the acceptance of the Treasury's bid would have implied an open scenario for any want-to-be shareholder. This decision proves once again that the free market is not free at all but very much restricted by the interests and bonuses of the bankers.

References: Reference to Barclays' move