If you ask a banker about his bonus as he knocks back the Château D’Yquem, he
won’t say “because I’m worth it”. But that’s what he thinks when he rolls
out of bed at 5am to catch the Heathrow Express to Terminal 5.
Disgusting, revolting and obscene are the words used of city bonuses. The
“masters of the Universe” are now vilified. Most people in Britain hold them
responsible for house prices plummeting in the past year as unemployment
rose, forcing even those who still had jobs to spend their summer holidays
shivering in rain-sodden Cornwall and to start darning their children’s
tights.
Yet the very people who a year ago went on their suited knees to the Treasury,
begging for bailouts, are now standing tall again, their Smythson wallets
bulging.
It’s BAB (Bonuses Are Back) time and the bankers appear determined to spend
them. They are in Bang & Olufsen buying 65in plasma televisions, and the
number of London houses selling for more than £1 million rose by 234 per
cent last month. The dog-walkers have returned to Kensington Gardens and
there is a collective sigh of relief in Chelsea that they no longer have to
clean their own BMWs or blow-dry their own hair.
No wonder all political parties are threatening to impose windfall taxes, and
Goldman Sachs has been described as “a giant vampire squid wrapped around
the face of humanity”. The Governor of the Bank of England, Mervyn King,
says that the bankers have a moral duty to behave modestly, and even Boris
Johnson has dumped them. Only two weeks ago the Mayor of London told
“would-be banker bashers” that “the leper colony in the City of London
produces 9 per cent of UK GDP”. Now he calls them “monstrous”.
It seems extraordinary that those in the City want to risk further criticism
by awarding themselves such excessive remuneration rather than attempting to
help liquidity-starved British businesses. Goldman Sachs staff are in line
for average pay packages of more than £425,000 this year. The state-owned
Royal Bank of Scotland is handing out between £1 million and £5 million of
taxpayers’ money to its top 20 employees. A study by the Centre for
Economics says that bonuses will rise by 50 per cent to £6 billion this year.
But these children of Gordon Gekko are not just blinded by greed, unable to
see themselves as others see them. They genuinely believe that they are
performing a vital service for the nation, creating jobs and boosting the
coffers. They argue that if they move their operations to Geneva, Britain
will become a stagnant backwater and are hurt that their philanthropy has
gone unnoticed.
None is prepared to talk about this on the record — they have seen what can
happen to those, such as Sir Fred Goodwin, who are caught for a moment in
the spotlight and forced to retire to a life of salmon-fishing. But many do
feel strongly about their value to Britain and about the mind-numbing hours
they work, and are prepared to justify their lives their bank balances in
private.
Here, six figures from the City of London explain why they are worth it.
The Investment Banker
“We are not a drain on society. Most of us send our children to private
schools, have private GPs and health insurance and rarely use public
transport. Almost all our tax goes to help others. I paid the Inland Revenue
nearly £500,000 last year and it will be more next year with the 50 per cent
tax rate, but I am proud if that money is helping the elderly and paying
other children’s school fees. My bank will pay more than £1 billion in
corporation tax. Our bonuses may seem vast but they are small crumbs from
the kind of deals we are doing and they help to boost the economy. I am
about to buy a house in Gloucestershire and renovate it, which will in a
small way help the housing market and prop up the building trade. We don’t
mug old ladies, terrorise our neighbours or live off benefits. Most of us
are high-flyers who have been working our socks off since our O levels, yet
we are now pariahs.”
The European Banker
“The British are insane. Their Empire has gone, their industries are dying and
the City is now their greatest asset, yet they insist on trashing it. I am
half-Italian, half-French. I would be proud if Paris or Milan were the
centre of the financial world, but I moved my family to Kensington because
London has been the place to be for the past ten years. The City fuelled
Cool Britannia; the ripple effect was huge. London seemed like the centre of
the world again and everyone benefited from the boom. Your transport system
is dreadful, your weather is dire but the atmosphere was exhilarating. All
the best brains in Europe and many from America have chosen to work here —
but if you want to remain at the top of the game, you need to pay proper
bonuses. I received nothing last year; this year my bonus will be about £1.5
million. If I don’t get it, I will move to Geneva. I won’t miss your
sneering attitude to success but I will miss your sense of humour.”
The Wife
“I know some people look at our lifestyle and cringe and it does sometimes
embarrass me. We have the obligatory double-fronted house in a communal
garden in Notting Hill, with a gardener, a housekeeper/cook, a cleaner, a
chauffeur, a nanny and a tutor. But it has come at a huge price. Most of the
time I feel like a single mother — my husband comes home now and again,
repacks his suitcase and is off to another European city. We do use Netjet
for our Ibiza summer holidays but that is because he gets only one holiday a
year, and even then he spends most of the time pacing up and down the beach
on his BlackBerry in his Vilebrequins. He can never make our son’s parents’
evenings and missed our daughter playing the lead in the school play. I
don’t think he has ever swum with the children in our pool. Even they
sometimes wonder whether all the quad bikes, Nintendo Wiis and skiing
weekends are worth it. I had to give up my career to keep the family
together and he now looks 20 years older than I do. We make a huge effort to
go to charitable events and are continually entertaining clients. But he
missed my surprise 40th birthday party because he was on a conference call.
If it wasn’t for the bonus, it wouldn’t be worth it.”
The Hedge Fund Manager
“Everyone is angry about the City but they need to be pragmatic and swallow
their envy of the bonuses. The only way to get Britain working again is to
let the financial world get back to work. There should be more regulations
on risk-taking but not on remuneration. I haven’t received any taxpayers’
money. I went to a comprehensive school, my sister is a nurse. I know that
what I earn can seem obscene but I have given more than £20 million to
educational charities — and it’s not a closed shop. Anyone can go into the
City if they are prepared to work their socks off and take risks. Soon I
will be paying 50 per cent income tax; if I took my business to Hong Kong it
would be 17 per cent, and in Singapore it’s 20 per cent. I stay in London
out of loyalty. I don’t expect to be appreciated but I shouldn’t be
demonised, either.”
The Young Recruit
“I’ve just finished the graduate trainee scheme and five years of 80-hour
weeks, half my friends have been fired and the other half don’t even have
time to water the plants on their desks. I’m 28 now; most don’t make it to
45 before they’re out — and there’s nothing worse than being a failed
banker. I got a first in PPE from Oxford, I’ve thought of giving away my
Dolce & Gabbana suits and becoming a teacher, but I have a mortgage and
my friends are all in the City now. No one else really understands us.
Everyone assumes that I’m paid millions but my salary is far less than
£100,000 for being at the partners’ disposal 24 hours a day. The bonus — I’m
hoping for £200,000 — is the incentive to keep going at 2am. I’m going to
buy a Bang & Olufsen music system with it but I’ll probably never have
time to use it. My friends don’t feel guilty about spending £100,000 on a
holiday because they are paid to be the best at understanding the markets.
It makes no sense for banks to have profits lying dormant; they need to pay
out bonuses to kick-start consumption, and we need an incentive. If I make
enough money, my children won’t have to go into the City. They can be
doctors or artists, they won’t be harangued at dinner parties and all that
slog will have been worth it.”
The Headhunter
“Why does a diamond cost £300,000 or a racehorse £400,000? It’s the market
value. Everything has a price and so do those who work in the City. If the
banks want to become successful again they need to employ the top CEOs,
analysts, fund managers and traders. That includes the banks now owned by
the Government, or the taxpayer will never reap any benefit. I recently
placed a client to head a bank’s German office and within 18 months he had
increased its turnover from £2 billion to £6 billion. He’s worth it — but if
he isn’t remunerated, he will move on. Companies don’t have time to train
from scratch and bankers are not loyal any more, so poaching is the obvious
solution. It would be suicide for a bank to decide unilaterally to scrap
bonuses. In any creative industry — acting, fashion, art or the media —
there are always stars who cause envy, but people seem to be particularly
jealous of the City. Win The X Factor and everyone expects you to
make millions, pickle a shark and you’re lauded but pull off a successful
deal and you’re scum. A few irresponsible bankers, mainly in America, may
have caused the recession but don’t castigate us all.”
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