City banks poised to pay bumper bonuses

Bonanza: Rejuvenated Barings leads the way in multi-million payouts

A bonanza round of Christmas bonuses in the City of London will begin this week with a payout at the investment bank Goldman Sachs likely to exceed $100m (pounds 66m).

Executives at Barings, bought after its dramatic collapse with losses of pounds 900m earlier this year by the Dutch banking group ING, are expected to receive about pounds 20m in total. A spokesman for ING yesterday confirmed bonuses would be paid at Barings. "We earlier said we would pay them as normal. The figures are a private matter with regard to personnel."

In addition, it is thought that Andrew Tuckey, the former deputy chairman of Barings at the time of the bank's collapse, will receive a fee of around pounds 500,000 from the bank. He continues to act as a consultant to Barings, working in an office on its executive floor. His 1994 bonus, due to be pounds 1.6m, was not paid. Mr Tuckey, who was unavailable for comment yesterday, is the subject of an investigation by the Securities and Futures Authority.

Barings and Goldman Sachs are among the leading beneficiaries of this year's takeover boom. Corporate finance activity in the City has returned to levels not seen since the frenzied days of the late 1980s. One senior banker said at the weekend: "Corporate finance departments have made a bucketload of money this year."

Barings' profits have stemmed from its role in several big deals, dominated by the pounds 9bn pharmaceuticals merger between Glaxo and Wellcome. It is also advising on the take- over of TSB by Lloyds Bank for pounds 6bn - helped by Mr Tuckey - and acted in the pounds 1bn Scottish Power bid for Manweb.

ING bought the profitable Barings businesses for pounds 1 after the bank's losses in Singapore brought it to its knees. It paid pounds 660m to creditors. However, shareholders in the bank and many bond investors have received nothing.

Last night Jonathan Stone, chairman of the bondholders action group, said he thought it was a "very poor judgemental decision by ING to pay further bonuses without first making any offer to the bondholders who have lost around pounds 100m".

Goldman Sachs has been another big winner in this year's surge in mergers and acquisitions. One of its biggest deals was acting for Eastern Electricity in its takeover by Hanson. Goldman's worldwide profit is thought to have more than doubled to above $1bn.

Bonuses at the investment bank are not expected to match the records set in 1993, when 100 staff received more than $1m each. Even so, payouts on this scale could go to more than 50 employees.

Other big beneficiaries of the wave of takeover activity in the electricity and water industries will include Schroders and Kleinwort Benson. Other investment banks which have seen a big increase in the amount of corporate finance business this year include SBC Warburg, Lazards, Morgan Stanley, Flemings and Deutsche Morgan Grenfell.

Fees generated by electricity and water takeover bids have been estimated at more than pounds 300m. Total mergers and acquisitions-related fees for the year could easily top pounds 1bn.

Not all investment banks will have shared in the boom to the same extent. Takeover activity on the Continent has been far more muted than in Britain, so banks such as Merrill Lynch, which do more business in the rest of Europe, are likely to have enjoyed less spectacular growth in fees in 1995 after a healthy performance in 1994.

However, income from trading activities has also picked up in the latest few months of this year. Even though most banks have relatively small positions after being stung by trading losses in 1994, this improvement should have been enough to guarantee healthy bonuses across almost the entire sector.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Recruitment Genius: Technical Report Writer

£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...

MBDA UK Ltd: Indirect Procurement Category Manager

Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Day In a Page

Greece elections: In times like these, the EU has far more dangerous adversaries than Syriza

Greece elections

In times like these, the EU has far more dangerous adversaries than Syriza, says Patrick Cockburn
Holocaust Memorial Day: Nazi victims remembered as spectre of prejudice reappears

Holocaust Memorial Day

Nazi victims remembered as spectre of prejudice reappears over Europe
Fortitude and the Arctic attraction: Our fascination with the last great wilderness

Magnetic north

The Arctic has always exerted a pull, from Greek myth to new thriller Fortitude. Gerard Gilbert considers what's behind our fascination with the last great wilderness
Homeless Veterans appeal: Homeless in Wales can find inspiration from Daniel’s story

Homeless Veterans appeal

Homeless in Wales can find inspiration from Daniel’s story
Front National family feud? Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks

Front National family feud?

Marine Le Pen and her relatives clash over French far-right party's response to Paris terror attacks
Pot of gold: tasting the world’s most expensive tea

Pot of gold

Tasting the world’s most expensive tea
10 best wildlife-watching experiences: From hen harriers to porpoises

From hen harriers to porpoises: 10 best wildlife-watching experiences

While many of Britain's birds have flown south for the winter, it's still a great time to get outside for a spot of twitching
Nick Easter: 'I don’t want just to hold tackle bags, I want to be out there'

'I don’t want just to hold tackle bags, I want to be out there'

Nick Easter targeting World Cup place after England recall
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore