End of an era for London's get-rich-quick bankers

LONDON // A top employment lawyer who has won substantial settlements for women claiming sexual discrimination in London's financial capital now says she is being inundated by male bankers laid off because of the economic downturn who want to gripe about their redundancy payoffs.

"They are crying down the phone," said the lawyer, who asked not to be named. "They complain they are only being given £100,000 (Dh530,500) compensation for losing their job. I tell them: 'Take the money. I can't get you get more.' I feel sorry for them as individuals. But not as a group. They have ruined so many lives." It seems that the financial tsunami that has swept across the world is finally catching up with those who many consider to be largely responsible.

This week, the men who once ran two of Britain's biggest banks, Royal Bank of Scotland and HBOS, appeared before a select committee of MPs to explain why they had needed tens of billions of dollars of taxpayers' money to bail out their banks. After apologising they confessed that they had never fully understood the "financial instruments" which fuelled the growth of recent years and then caused global meltdown.

It was a spectacle which horrified but also fascinated the country, and Europe. Executive bankers had been an untouchable elite who earned extravagant salaries, bonuses and share options. Another member of the group, Sir James Crosby, who once led HBOS and was a confidant of Gordon Brown, the prime minister, had to resign as deputy chairman of the Financial Services Authority after allegations that he had fired a whistle-blower at HBOS in 2004 for warning the bank was taking too many risks.

The revelations have prompted a round of questions, including how a global financial centre could become a casino where bankers gambled with apparent disregard for the outcome. And why banks regularly paid out bonuses even when they were losing hundreds of millions. But now it seems that era may be drawing to a close. This weekend the British government is faced with demands from across the political spectrum to stamp out bonuses immediately, especially at those banks which have received public money. But it is not as simple as that, the government says, since many bankers have legally enforceable contracts.

For example, government sources said nothing could be done legally to stop RBS paying bonuses even though the bank is now 70 per cent owned by the state. Critics, however, point to the US, France, Germany, Switzerland, Holland and Norway, where authorities have said banks which have taken public money will not be allowed to pay out bonuses. These governments have also said that bonuses generally, which encouraged irresponsible dealing, must be curbed. Nicolas Sarkozy, the French president, said he was "shocked by the system of pay" for bankers.

Mr Brown told British MPs on Thursday that the "short term bonus culture of the banks has got to end" and that new rules, possibly involving a "claw back" system, where bonuses would be paid over years rather than in a lump sum, could be announced in the budget in April. Ronnie Fox, a top employment lawyer in London, has reportedly been approached by a group of senior bankers who claim it would be a breach of their "human rights" if their bonuses were stopped.

But they have little chance of success, the lawyer who usually represents women in the City said. She believes the bankers are bluffing and would be too embarrassed to sue. If anything, she said, the government, shareholders or members of the public should sue bankers because they did not act in the best interests of shareholders or customers, as required by law. "All these people care about is money, money and money. Money is their God," she said.

That is certainly the picture painted by those who have worked in the City. "For most people it is just about the money. You are judged on how much you make. No one says, 'Oh, tell me how you construct a deal. How interesting!' They only want to know how much you earn," said Seth Freedman, 28, who spent six years as a broker and is about to publish a book, The Real Inside Story of Cash, Cocaine and Corruption in the City.

But Mr Freedman also said he believed bankers were being made scapegoats for the current crisis. "Everyone was happy when shares and house prices were going up. Now bankers are being blamed for everything." Polly Courtney, 29, who worked for a year as junior analyst at an investment bank in London, has also written a book, Golden Handcuffs. "I was shocked by the contempt of senior people for the rules. It is all about bonuses. I was shocked. People were getting bonuses even if things had gone badly," she said.

The highest-profile critic of the City is Geraint Anderson, 35, who amassed a fortune of £3 million during his 12 years advising investors around the world on European utilities. In his final months of working last year, Mr Anderson wrote a hilarious, anonymous column for a free newspaper in London, describing the excesses of the City. Then he published a book, City Boy: Beer and Loathing in the Square Mile, on the same subject, which was a bestseller.

"You are told when you get there: 'This is a hire and fire place'. So, you think, I am going to make money as quickly as I can because I might not be here tomorrow. It is a casino. Except it's not your money. If you win you get a chunk as a bonus. If you lose, it doesn't matter." In his final year, he said, he was paid a bonus of £500,000 - and that was working in a low-risk sector. He thinks that people in the City are coming to terms, reluctantly, with the fact that the days of routinely huge bonuses are over. "It's a big shock. We were like bank robbers. We used to say: 'One more job and I am out'. But the money always pulls you back."

sfreeman@thenational.ae

The%20specs%3A%202024%20Mercedes%20E200

%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2.0-litre%20four-cyl%20turbo%20%2B%20mild%20hybrid%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E204hp%20at%205%2C800rpm%20%2B23hp%20hybrid%20boost%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E320Nm%20at%201%2C800rpm%20%2B205Nm%20hybrid%20boost%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E9-speed%20auto%0D%3Cbr%3E%3Cstrong%3EFuel%20consumption%3A%20%3C%2Fstrong%3E7.3L%2F100km%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENovember%2FDecember%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh205%2C000%20(estimate)%3C%2Fp%3E%0A

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

How%20to%20avoid%20getting%20scammed

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Globalization and its Discontents Revisited
Joseph E. Stiglitz
W. W. Norton & Company

WHAT IS A BLACK HOLE?

1. Black holes are objects whose gravity is so strong not even light can escape their pull

2. They can be created when massive stars collapse under their own weight

3. Large black holes can also be formed when smaller ones collide and merge

4. The biggest black holes lurk at the centre of many galaxies, including our own

5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed

At a glance

Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year

Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month

Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30

Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances

The%20specs

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Formula Middle East Calendar (Formula Regional and Formula 4)

Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi

Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi

Round 3: February 7-9, Dubai Autodrome – Dubai

Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi

Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia

Ferrari

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Real estate tokenisation project

Dubai launched the pilot phase of its real estate tokenisation project last month.

The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.

Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.

Q&A with Dash Berlin

Welcome back. What was it like to return to RAK and to play for fans out here again?
It’s an amazing feeling to be back in the passionate UAE again. Seeing the fans having a great time that is what it’s all about.

You're currently touring the globe as part of your Legends of the Feels Tour. How important is it to you to include the Middle East in the schedule?
The tour is doing really well and is extensive and intensive at the same time travelling all over the globe. My Middle Eastern fans are very dear to me, it’s good to be back.

You mix tracks that people know and love, but you also have a visually impressive set too (graphics etc). Is that the secret recipe to Dash Berlin's live gigs?
People enjoying the combination of the music and visuals are the key factor in the success of the Legends Of The Feel tour 2018.

Have you had some time to explore Ras al Khaimah too? If so, what have you been up to?
Coming fresh out of Las Vegas where I continue my 7th annual year DJ residency at Marquee, I decided it was a perfect moment to catch some sun rays and enjoy the warm hospitality of Bab Al Bahr.

NO OTHER LAND

Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal

Stars: Basel Adra, Yuval Abraham

Rating: 3.5/5

RESULTS

Time; race; prize; distance

4pm: Maiden; (D) Dh150,000; 1,200m
Winner: General Line, Xavier Ziani (jockey), Omar Daraj (trainer)

4.35pm: Maiden (T); Dh150,000; 1,600m
Winner: Travis County, Adrie de Vries, Ismail Mohammed

5.10pm: Handicap (D); Dh175,000; 1,200m
Winner: Scrutineer, Tadhg O’Shea, Ali Rashid Al Raihe

5.45pm: Maiden (D); Dh150,000; 1,600m
Winner: Yulong Warrior, Richard Mullen, Satish Seemar

6.20pm: Maiden (D); Dh150,000; 1,600m
Winner: Ejaaby, Jim Crowley, Doug Watson

6.55pm: Handicap (D); Dh160,000; 1,600m
Winner: Storyboard, Richard Mullen, Satish Seemar

7.30pm: Handicap (D); Dh150,000; 2,200m
Winner: Grand Dauphin, Gerald Mosse, Ahmed Al Shemaili

8.05pm: Handicap (T); Dh190,000; 1,800m
Winner: Good Trip, Tadhg O’Shea, Ali Rashid Al Raihe

Tips for taking the metro

- set out well ahead of time

- make sure you have at least Dh15 on you Nol card, as there could be big queues for top-up machines

- enter the right cabin. The train may be too busy to move between carriages once you're on

- don't carry too much luggage and tuck it under a seat to make room for fellow passengers

No.6 Collaborations Project

Ed Sheeran (Atlantic)

On Women's Day

Dr Nawal Al-Hosany: Why more women should be on the frontlines of climate action

Shelina Janmohamed: Why shouldn't a spouse be compensated fairly for housework?

Samar Elmnhrawy: How companies in the Middle East can catch up on gender equality

The National Editorial: Is there much to celebrate on International Women's Day 2021?

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