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City’s bars and retailers gear up for the bonus season

Rewards may be down and sentiment against them, but bankers will still be flaunting the cash

“We still do well in February – it’s bonus season,” says Holly Midwinter-Porter of Boodles, an upmarket jeweller opposite the Bank of England in the heart of the City of London.

Stephen Hester, chief executive of Royal Bank of Scotland (RBS), won’t be collecting his £1m bonus this month, but thousands of other bankers will. Boodles, and other high-end jewellers, including Bulgari and Theo Fennell, in the historic Royal Exchange on Threadneedle Street, are counting on them.

“It’s the reason we’re here,” says Midwinter-Porter. “It’s different from four or five years ago [before the credit crunch] but there is still a very noticeable increase [in custom] in February.

“They come in straight after work, and they’ve come in to spend their bonus,” she says. “It’s normally for themselves, it will be a Patek Philippe watch or similar. But if it’s been a particularly good year they’ll buy something for their wives too.”

She says the average spend can be well over £50,000, but the notion that bankers run out of the office and buy the first expensive thing they see is unfounded. “They would have been coming in to look all year … They’ve had a hard time and it’s been miserable for them, they are universally hated.”

At the bar in the heart of the grade I-listed Royal Exchange, designed by Sir William Tite as a trading floor for merchants and tradesmen, the talk invariably turns to the forthcoming bonus season and banker-bashing that led to Hester forgoing his bonus and his predecessor Fred Goodwin being stripped of his knighthood.

But across the City very few bankers are prepared to publicly speak out in defence of the £4.2bn in bonuses they are expected to receive this year – the lowest for almost a decade according to the Centre for Economics & Business Research (CEBR).

“We personally make hundreds of millions for our bank, and will get paid a very small fraction of that as a bonus. It’s how the industry works. If they stopped paying bonuses here people would move abroad,” says one banker who declines to be named.

“Everyone in the City thinks Hester has been treated appallingly,” a director of an executive recruitment company specialising in the banking industry says. “He’s got the worst job in the world, and he’s being paid far below market rate to do it. He must be regretting ever taking that job. Worst of all he can’t leave because it will look like he’s leaving in a huff over the money.”

He says bankers are victims of “political hysteria” that is painting them as villains ripping off the system, when their pay “endorses a structurally flawed” global pay system.

“They are taking advantage of the structure, it’s the same as footballers, but no one complains about Wayne Rooney getting £250,000 a week.”

It will be at the Royal Exchange’s Grand Café, and other champagne bars across the Square Mile, that bankers will meet later this month to celebrate another well-remunerated year.

Despite public opprobrium against excessive pay, many bankers won’t be afraid to display their bonuses. A Grand Café cocktail waitress tells the Observer the days of bankers racking up five-digit bar bills are far from over. “£10,000?” she says. “We take far more than that in private rooms.”

Outside RBS’s headquarters near Liverpool Street, a collector for homeless charity St Mungo’s is finding it hard trying to get people to sign up for donations. “The quality of people we get is really good – being next to RBS. But the number of people who stop is much lower than in any other area we work in.”

Across the road the Classic Car Club, in which people pay thousands of pounds a year for a timeshare deal that allows them to drive Rolls-Royce Corniches and Jaguar XK 150s, is doing a roaring trade. “This is the best possible pitch,” says owner Nigel Case. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds