It pays to be big if you're an investment manager. Being good is optional

My Week

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The Independent Online

The weekend before Britain’s biggest banks begin to disclose how much they set aside to pay staff last year is no time for pity.

If Barclays, Royal Bank of Scotland and others have got it right, their bankers will take a shrinking portion of a shrinking pot thanks to European bonus caps and investor pressure.

But there are no such troubles in the asset management industry, as a piece of analysis from the think-tank New Financial pointed out this week. Because pay has remained constant relative to revenues, and revenues are in lockstep with assets under management, the funds boom of the last decade has seen remuneration rocket.

There are glimpses of the riches on offer for top fund bosses. It has been known for Michael McLintock, head of M&G, to be paid more than Tidjane Thiam, the chief executive of Prudential, the insurer of which it is part – although last year his £6.5m package fell £2m short of that feat.

Largely, though, how much the money men are paid – and how that is calculated relative to performance – is kept under wraps. This begins to jar, especially as equities, pumped up by quantitative easing programmes, have surfed a rising tide. Can it really be twice as hard to invest £2bn of pension money as £1bn?

Fund managers look as if they are being rewarded for their scale, not their competence, yet threats to overhaul the fees structure rarely gain traction. The Financial Conduct Authority this week launched a review of competition in investment and corporate banking and said a market study of asset management may follow later this year. It can’t come soon enough.

Click and collect restores some relish to high street

Jill McDonald, the appropriately – but coincidentally – named boss of McDonald’s in Britain, the Nordics and Germany, offers a great perspective on the health of the British high street. We met for coffee this week in one of her restaurants close to the City.

McDonald’s closed some branches a few years ago but has since been on an opening spree, mainly adding drive-throughs to the estate. Ms McDonald admits that for her to add a new high-street outlet, it would have to be on a “pretty special” high street.

Despite sales problems in the US – which saw Steve Easterbrook, a Briton, installed as group chief executive recently – the chain is still growing in Britain. That’s despite competition from gourmet burger restaurants, the arrival of Five Guys on these shores and the multitude of takeaways. But high-street trading is “pretty hard fought”, Ms McDonald admits.

Most surveys show that in-town footfall has been declining, not just because of the recession, but because more shoppers have gone online or headed into shopping centres. The failure to review sky-high business rates nudged some smaller retailers towards closure.

However, Ms McDonald is more upbeat about the high street than two years ago. The reason? Click and collect has given a “little bit of a kickstart” to Britain’s forlorn shopping thoroughfares. Retailers including John Lewis and Argos have worked out that letting customers pick up their online-ordered goods somewhere central is better for them than if they have to wait in for a delivery man. So old-fashioned bricks still come in handy for retailers powered by clicks – and shoppers still march on their stomachs.

The British hi-tech scene  is going to another level

Readers of a certain age will find it amusing that Level 42 is no longer just an Eighties pop band. In the eyes of young digital entrepreneurs, it is the overspill floor from Level 39, a hub for financial technology start-ups near the top of Canary Wharf’s central tower, where I had a wander this week.

On 42, there are 20 companies that have spread their wings, recruited a few extra bodies and maybe attracted some money from outside investors to fund the development of mobile payment apps or cyber-security systems. Back on 39, it is reminiscent of an airport lounge, with space for members to drop in (as much as you can drop in 39 floors up). The only thing stopping it being a typical open-plan set-up is that banking regulations mean some tenants require rooms with lockable doors.

London’s tech scene is going through a purple patch, although with 7.5 per cent of the national workforce in digital industries, it is also hard to get away from start-ups in places like Bournemouth and Liverpool.

There was a time when a Level 39-type enterprise would not have fitted in among the gleaming banking halls of Docklands. Canary Wharf saw that it did, and the start-ups fare better than they might do in San Francisco or Tel Aviv because the banks and insurers that need to overhaul the way they do business are right on the doorstep. Level 24 doesn’t evoke as many Eighties memories, but almost two years into this enterprise, that is where another “high-growth space” has just opened its doors.

A week is a long time in football television rights

Question: how long does it take the market to digest a £4.2bn spending splurge? Answer: just seven trading days. Sky shares slumped in the aftermath of the Premier League TV rights auction. By the close on Thursday they had regained all the value they had lost. It is worth noting that the calls for more of these broadcasting riches to be poured into grass-roots football went quiet just as quickly.

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