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RIGFIND THEHT DEAL SPREAD BETTING WITH IG LOSSES CAN EXCEED YOUR INITIAL DEPOSIT 99.5% OF DEALS EXECUTED IN 0.1 SECONDS 100% PLATFORM UPTIME THE POWER TO COPE WITH VOLATILITY CREATE AN ACCOUNT IN UNDER 3 MINUTES IGINDEX.CO.UK/SPREADBET LOSSES CAN EXCEED YOUR INITIAL DEPOSIT ([HFXWLRQÀJXUHVUHODWHWR1RY8SWLPHÀJXUHVUHODWHWR2FW1RY BUSINESS WITH PERSONALITY BUSINESS DIAMOND FIGHTS BACK JUBILEE SIMON DENHAM THE QUEEN MARKS STANDS UP FOR THE SIXTY YEARS ON CITY P26 THE THRONE P12 Issue 1,564 Monday 6 February 2012 www.cityam.com FREE Heathrow TRUTH ABOUT BANKER PAY: flights cut amid snow ▲ ECONOMY IT’S FALLING BY TIM WALLACE ▲ BANKING Investment banks are slashing pay with perhaps worse still to come. HEATHROW airport yesterday can- BY JULIET SAMUEL This coupled with the recent whole- celled half of the 1,300 sceduled COMPANY AVERAGE CUT IMPACT sale redundancies has left morale at flights as snow and freezing temper- BRITISH investment bankers are an all time low,” he added. Bonuses atures hit Britain. braced for deep slashes to their pay Expected cut of 30 per make up the majority of the pay Despite the massive disruption at packets after a slowdown in trading 30% cent could be accompanied packet for many bankers. the UK’s busiest airport, owner BAA saw their US rivals cut bonuses by up by job cuts Tim Hedger of bank recruiter said its snow plan had worked “far to 30 per cent. Marks Sattin says that banks had better” than in previous years. It Industry insiders say that UK Affects senior investment been expected to put up base salaries claimed making a decision about bankers are looking at a pay cut of bankers; some get bonds in response to strict regulation of flight cancellations on Saturday gave 20-50 per cent – in addition to thou- 30% backed by derivatives. bonuses but because of the difficult passengers time to cancel or rebook. sands in job cuts – contrary to the Covers senior investment environment, that has not hap- Around 10cm of snow blanketed public view that the City has contin- pened. the UK in 24 hours, stranding ued to ramp up rewards through the 20- Covers senior bankers and “The expectation was that base pay motorists on major motorways crisis. traders, caps cash bonuses would rise but it’s been flat. Bonuses including the M25 and M40. Angela Knight of the British 30% at $125,000, raises average have been hit. Expect 30-50 per cent But economists said this week- Bankers’ Association (BBA) said yes- deferred pay to 75 per cent. cuts,” he says, saying that the crunch end’s snow has not yet set in and – terday that “the public commentary has badly “affected morale”. unlike the heavy fall of December has not kept up” with changes on the 30% Reduces bonuses for The cuts are likely to fall very 2010 – is unlikely to have a big ground. She slammed politicians and investment banking unit. unevenly, however: most bankers will impact on GDP. media for “sweeping the facts to one see their bonuses slashed drastically “Fortunately for many retailers side and distorting the debate”, Applies to investment while a select group of the most tal- the snow was not hugely disruptive adding that on the pay debate: “We bankers; freezes ented staff will see a far smaller during opening hours on Saturday, need to end the personal pillorying.” 25% some salaries change. “The top performers will be which of course is a crucial shopping Barclays will be the next bank to and limits some cash looked after,” says Hedger. day,” said Howard Archer, of IHS brave the storm on Friday when it bonuses to $150,000. Last year, banks announced over Global Insight. unveils full-year results, which are 120,000 of job cuts globally, a num- “It should not be enough to stop expected to show a pre-tax profit of 26% Affects pay for all ber that has only increased since most people getting to work or to £6.2bn. Pay cuts of nearly 30 per cent 33,300 employees. then. seriously disrupt supply chains by are said to be in the pipeline for its The mass lay-offs and bonus cuts stopping goods, components and investment bankers. Covers salary, bonus will also deliver a big hit to public raw materials being moved around.” With revenues shrinking due to 9% and benefits at finances as tax revenues generated Early winter snow in December new regulations and market turmoil, investment bank. by the City drop. 2010 caused British GDP to contract banks are being forced to cut pay and By way of example, Baker Tilly’s in the final quarter of the year. jobs to stay out of the red. Cut falls on staff at David Heaton says a third of the Economic output fell 0.5 per cent, Headhunters say that the cuts are 15% Deutsche’s corporate and bonus awarded to RBS chief execu- with sectors including mining and so widespread that talented City SOURCE: BLOOMBERG investment bank. tive Stephen Hester would have gone construction hit particularly hard by workers are considering leaving to the taxman if he had not waived it. the weather. bulge bracket firms in droves. than ever before,” says Kumaran “Bonuses and overall compensa- “The exchequer stands to lose The Met Office is not expecting “We are seeing more candidates Surenthirathas, front office chief for tion announced to date are 25-35 per around £360,000 in 2014 [from the heavy snow in the next week, but interested in external opportunities recruiter Eximius Group. cent down on this time last year, row],” says Heaton. says it may return in late February. Treasury tries to placate City Rival eyes £500m GlobeOp bid ▲ REGULATION of the bill will force regulators to consider if the ▲ M&A since the middle of January. costs of new rules are in “proportion” to their It is understood that SS&C will fire off a BY JULIET SAMUEL BY JULIET SAMUEL benefits. It aims to allay worries that new regu- bidding war with GlobeOp’s current suitor, THE TREASURY will try to win around critics of lators could ignore the “international competi- A NEW bidder has entered the £500m race to US private equity giant TPG Partners, if it its flagship Financial Services bill today by tiveness” of the City when imposing new rules. buy GlobeOp Financial Services, the hedge moves towards making an offer. inserting a new “proportionality” test for all But it might not placate critics: LSE’s Tracey fund services firm. A source familiar with the situation said new regulations on the City. Pierce said she hoped the bill would be US-based SS&C Technologies, a rival to any new bid from SS&C will consist of a In a last-ditch effort to stem a tide of criti- “enshrining competitiveness in our regulatory GlobeOp, said late last night that it has been “higher cash offer” than the £500m that is cism, City A.M. understands that the new version framework”. VOICE OF THE CITY: P12 performing due diligence on the company now on the table. Certified Distribution FTSE 100 ▲5,901.07 +105.00 DOW ▲12,862.23 +156.82 NASDAQ ▲2,905.66 +45.98 £/$ 1.58 unc £/¤ 1.20 unc ¤/$ 1.31 unc 28/11/11 till 01/01/12 is 92,879 If you are serious about FX. Make one good trade today. Scan to get the SaxoTrader App Stay ahead. Get tighter pricing and award-winning speed of execution‡. Trade the markets? Make the trade with Saxo. 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Shiv Bassi Professional FX Investor Blacktree Investment Partners 4 News CITYA.M. 6 FEBRUARY 2012 Why the debate has gone all wrong There is also an ongoing jobs blood- gone. Obviously, pay (and revenues and caused the bubble – and that a reces- bath. This correction is easily explain- profits) were too high during the bub- sion would have happened anyway, able: banks now have to hold more ble – but the system is readjusting. regardless of the proximate cause of capital and lower-yielding, liquid An even more irritating issue is the the crisis, namely US sub-prime mort- assets – this is slashing profits and absence of any economic explanation gages (themselves promoted by US gov- especially return on equity, now often of the crisis – as opposed to populist ernment agencies). below the cost of capital. The only way nonsense confusing the human-level This time, monetary policy errors to reverse this is for banks to slash manifestation of the bubble (higher weren’t purely caused by domestic cen- costs (especially pay), shut low-return house prices or City pay) with its deep tral banks – rates were driven down by EDITOR’S LETTER units and shrink balance sheets.

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