A gloom has descended on the City of London. Britain's financial services industry, the engine-room of the economy, is forecast to lose 30,000 jobs this year. Vast cash bonuses are a thing of the past. Businesses which thrived on excess have had to learn moderation. And rival financial centres from Switzerland to Singapore are threatening to steal more business.
Many will welcome such a comeuppance. But this isn't an isolated issue the rest of us can ignore. The billions the City has made since the 1980s have trickled down to the capital and beyond.
In a week-long series of articles starting today, we look at the state of Britain's financial services industry, the challenges it faces, whether it can ever recover – and whether we should care.
Back in the good old days, that distant time before anyone had heard of sub-prime mortgages or quantitative easing, The Coq D'Argent occupied a certain place in the City mindset, at least among a particular breed.
Its geography, right at the heart of the Square Mile at Number One Poultry was helpful, but it also has a stylish rooftop bar from where bankers could celebrate the day's victories in loud voices with expensive booze.
It was a place to swap gossip and at least pretend you were on the inside, that you were Bud Fox in Wall Street before he got stiffed by Gordon Gekko. Traders might entice you like this: "See you in The Money Chicken at six, sunshine. Bring that mate of yours. No, the good looking one."
From here, while the views were admired, traders did what they do best: talked themselves up. Outrageous brags were bragged, sordid tales were exaggerated and self doubt was for fairies.
If you could leave the nagging voices behind, stop yourself wondering if it could be fair that these characters should be so casually wealthy and just let go, it was a lot of fun, for a while, anyway.
No one calls the Coq D'Argent The Money Chicken any more. It's famous for rather different reasons than laughter and cash lately. In the last few weeks, two City workers have jumped to their deaths from the bar. Four have done so since 2007.
It's probably wrong to draw any link between the terrible decisions made by some desperately unhappy people and the wider mood around EC2, but the old Money Chicken crowd, whose humour always ranged from mawkish to black in any case, think it's not coincidental.
"We know how they felt," goes the line from the trading crew, and they don't smile when the say it. The City of London is miserable. There's not much trade being done so hardly anyone is making enough money to justify their salaries.
Sackings – always on the cards in a hyper-competitive environment – are brutal and regular. The number of City workers seeking treatment for stress and for alcoholism has soared, say clinics.
You can say that they deserve all this, and you might be half right, but even bankers are human – some of them – and their lives have as much or as little meaning as anyone else's.
The boss of one investment bank – a serious mover and shaker – says he tells his staff to be low key in all situations, especially if doing business outside London. "I say to them: remember people hate you. That's your starting point," he says.
From this position, there's no small amount of finger pointing and a certain remorse for how things used to be. Bruce Packard, a City analyst, says: "There is lots of cynicism about. The City used to be a self policing club. They drank at lunchtime – no one could have designed a CDO squared after lunch, but they were still vaguely competent in the afternoon. "Then with 'professionalism', competence improved, but there is now infinitely less trust around. People realised that it was in their best interests to make sure that sharp practice was frowned upon. It was conservative with a small c."
The number of recent rogue trading and insider dealing cases suggest that, if anything, there's more misbehaviour than ever as bankers fight to find ways to make a turn.
Packard adds: "It used to be that you could make enough money honestly – why would you take the risk of doing something dishonestly? I blame the Americans. Why the Americans? They have a culture of 'If it's legal, then we should do it'."
Magnus Wheatley, an old City hand, says one reason for the gloom is that no one is enjoying themselves. "The City seems a moribund, dead world, full of zombie middle-management and accountants. We mourn the loss of the great characters, the corporate raiders, the antic-crazed character brokers, the colour of the LIFFE traders, the long lunches, the legendary bar tabs and the strip club stories on a Friday morning. It's over."
Is this the worst time ever? "Yes," says Wheatley. "Worse than the 1990s but with nicer premises."
Fund manager Alan Miller elaborates on the theme: "Most years everyone in the City says it's the worst they have ever known – this year it is probably the closest to the truth. In almost every area, both revenues and profits seem to be under pressure.
"You will always get an investment banker managing to drum up a completely insane deal to executives blinded by the opportunity to run a bigger company with a bigger salary (see British Aerospace for details) – [but] these seems generally few and far between."
Trading activity is also low, so brokers are not earning great revenues from that either. And stock market floats are thin on the ground.
For things to turn round probably requires one or more of the following – a raging bull market (unlikely), an increase in mergers and acquisitions (possible, as company balance sheets are strong, but many chief executives are still nervous) and for the trend for more intensive scrutiny of overall fees and costs to subside (impossible).
Perhaps the problem, says Miller, is not that people don't get the City, but that they get it all too well. High fees, hidden costs, brazen conflicts of interest combined with unrivalled arrogance.
"What is required is a deep cleansing of people and practices and psyches, but this will not happen overnight if at all," says Miller. "It will inevitably lead to a loss of jobs, but then how many of these really had much point in the first place?"
So how does the City, once the pride of London, emerge from this moribund state? Wheatley says: "It's not going to be easy, and we've got at best another eight years to 2020 of public ridicule and mistrust. What's going to turn it around? Good professional handling of flotations and corporate fund-raisings, decent handling of individuals who entrust their money to us, fairer charging, transparent charging and a belief that running people's money whether private or corporate is a privilege, not a right."
Things may change. But probably not this much.Reuse content