Capital falls out of love with the City

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They have been the architects of London’s rise to global eminence, championed by politicians, fêted by the media, pursued by social climbers and courted by estate agents and luxury brand purveyors.

For years it seemed banking was the best job in London, providing not just wealth but an ever-increasing social status.

But as the implications for the taxpayer of the government’s £400bn bank bail-out filtered through to the public consciousness this week, it seemed the capital was finally falling out of love with its masters of the universe.

Even Gordon Brown, who has long courted the Square Mile, attacked “excessive and irresponsible” City greed in the wake of his historic rescue package.

On the gilded West End shopping streets, the recipients of much of the City wealth in recent years, there was little doubt among even the ostensibly well-heeled shoppers that bankers were the bogeymen of the economic crisis.

“I don’t have any sympathy for them,” said Louise Pollock. “They have had it their own way for too long. There is a sense that a lot of them were taking a lot of money out of the system in bonuses.”

In an FT survey, anger repeatedly surfaced over lavish bonuses paid to leading figures at institutions that were now being bailed out with taxpayers’ cash.

“It’s their cowboy attitude,” said James Wardle, a headhunter. “Why should I have to pay for it?”

There was widespread relief that the government had acted to shore up confidence, accompanied by a distaste for the recipients of the bail-out funds. “I know people who got £500,000 bonuses at Christmas,” said wholesaler Tina Brayfield. “They can’t justify those huge sums.” Even on the streets of the City, sympathy was in short supply. Gary Williams, who works for a software company, blamed “a massive bonus culture in a deregulated industry”.

“They aren’t working for the common good,” he said. “They’re working purely for their own ends.

“[The bail-out] is a must-happen situation. I’d rather see the money spent on health care. I’d rather the banks have their pain as well as the gain but unfortunately it doesn’t happen. We’re scared to see what could happen.”

William Rickards, who works in asset management, warned that banks would simply use the public funds to make more money. He said: “It’s effectively our money that’s being pumped into this system, which will ultimately be lent back to us at whatever rate for the banks to make money again. It’s injustice.”

David Allen, who works in media sales, suggested: “Maybe bankers should be saying ‘we’ll give back some of the money we have taken’. But I can’t see it happening.”

But he gave short shrift to ministers’ pledges to clamp down on executive salaries and bumper bonuses. “It’s just a political move to try to stop people complaining about the money they have handed out.”

Arjun Devit, a financial recruiter, insisted it was wrong for the government to intervene in private sector pay. “It’s not the government’s job to take away bonuses from bankers who are working 60 or 70 hours a week.”

Back on New Bond Street, the only sign of the credit crunch biting amid the shoppers emerging from designer stores laden with bags and the personal-plated Aston Martins and Bentleys gliding by was an Evening Standard billboard proclaiming: “Tycoons lose billions in crunch.”

But there was some sympathy for those less affluent financial workers likely to be hit by a downturn. Shopper Francis Hammond said: “I do have sympathy for the mass of workers, the people who will lose their jobs when they thought they had a secure future.”

Gesturing to the luxury stores around her, she acknowledged the potential effect on the economy: “It will be interesting to see if all these shops are still here in a year’s time.”

Others blamed a failure of regulation and inappropriate incentives more than the personal responsibility of bankers. “They could have been more responsible but they were just working within the system,“ said Olga Molokina, a Russian immigrant working in London. Nick Bretton, a customer relations executive, said: “There’s a lot of hype about greedy bankers who’ve gotten us into this trouble but I think they’ve only given us the service we’ve been asking for. A bit like McDonald’s selling unhealthy food but people choosing to buy it. The British banks have been feeding the appetites of the British consumers.”

In Mayfair, home to the hedge fund community, some felt they were on the receiving end of unjustified criticism. “The bankers screwed up and the hedge funds got blamed,” said Magnus Nilssen, a hedge fund manager.

He was not worried about the prospects for bankers: “The brightest people in investment banking will just go into more entrepreneurial activities.”

And he was adamant that the days of hefty bonuses would return. “It‘s not over. it’s just over for a while,” he added. “London is full of clever people [who make money] and they are not going to go away.”

His colleague Jerome Darmon thought it was pointless to apportion blame: “The government had to intervene whether you like it or not and whether the right guys or the wrong guys are blamed. It doesn’t matter any more.”

And in the City, some bankers were feeling hard done by. Gavin Sutton, who works for Turkiye Is Bank, said: “The banking industry is not very popular . . . But it’s not my fault. I think we’re all being tarred with the same brush whether we are involved directly or not.”

But for all of the prime minister’s rhetoric condemning bankers for taking excessive risks, some voters were convinced that it is the government that would have to shoulder much of the blame.

Joanne King, a sales executive, said: “The government should have been watching more carefully. Maybe they were depending on the banks too much. They just closed their eyes.”

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