Elite 'superbankers' get record bonuses - but rest are left crying into their Peroni

All but the absolute elite are expected to be disappointed by this year’s payouts

If you’re planning on hitting the bars of the City and Canary Wharf in the coming weeks, expect to see many a banker crying into their Peroni. Bonus season is upon them, and it could be one of the most divisive in years as London’s highest flying “superbankers” win big at the expense of the rank-and-file.

City bankers make millions from advising on high-profile takeovers and financing deals, but for many, the most nerve-shredding negotiations are taking place with their own bosses right now as they try to secure their annual bonus.

These discussion are reaching crunch point at US banks such as JP Morgan and Goldman Sachs, where staff will be informed of their 2013 “comp” – shorthand for bonus - ahead of their annual results next week.

Bankers at European firms such as Deutsche Bank, Credit Suisse and UBS will have to wait until early February, but they will take their lead from Wall Street, using any evidence of a bumper payout to broker a better deal. But disappointing results and ongoing restructuring in an industry still recovering from the financial crisis of 2008 and the European crisis of 2011 have added tension to discussions.

A return of lucrative mega-deals in 2013, including Vodafone’s £84 billion sale of its US mobiles division and the Treasury’s £3.2 billion disposal of Lloyds bank shares, resulted in huge fees for a handful of leading banks and their elite “rainmakers”.

But the riches are likely to be spread more unevenly than ever, with a few so-called superbankers taking home up to $10 million while the toiling masses below them are left nursing the same pay as last year or possibly less. A sizeable minority will end up with what is known in the trade as a “doughnut” – City slang for a Big Fat Zero.

Those in line for payouts of $5 to $10 million are said to include Karen Cook of Goldman Sachs, and JP Morgan’s Ina De and Viswas Ragavan. City sources said the biggest earners on takeover deals were likely to be those who advised on Vodafone’s sale of its stake in the US mobiles giant Verizon. UBS’s former deals kingpin Simon Warshaw and Goldman’s Cook are likely to pocket several million dollars for that one transaction alone. Top staff at the advisory firm Moelis like Geoff Austin and Caroline Silver will also be paid handsomely. Moelis advised on the Publicis-Omnicom advertising merger and the takeover of Co-op Bank by its bondholders.

Also among the “superbankers” in London with outsize bonuses in the millions of pounds are expected to be Credit Suisse’s Marisa Drew, promoted last spring to the post of co-head of European investment banking, making her arguably the most powerful woman in European banking.

A future star at Goldman Sachs and also heading for a big payout is Lucy Baldwin. Just 28-years-old, she is already one of the most powerful analysts at the bank.

Overall, however, banks continue to struggle to make the megaprofits of old, and bonuses will reflect that. As one senior City headhunter said: “Goldman’s corporate finance department had a record year, but its trading division did badly, so the overall bonus pool has been hit for everybody. It’s the same everywhere.”

The big fines to hit banks like JPMorgan, which lost $6 billion in the London Whale trading fiasco, will also hurt the overall bonus pot.

Meanwhile, faced by the more onerous regulations and heavy overheads for the big banks, some of the biggest dealmakers with the best contacts books have set up shop on their own – a move likely to make themselves even more money. After overseeing the Vodafone deal, Mr Warshaw quit UBS to set up a specialist “boutique” advisory business with former Morgan Stanley titan Simon Robey and Simon Robertson of Goldman Sachs, who made themselves tens of millions of pounds on takeover deals before the financial crisis.

City sources say the gap this year between joy and disappointment will be larger than ever. That’s because the big engine of profit growth – the fixed income trading operations of banks – is in danger of running dry as increased regulation is increasing the cost of trading.  Many banks are being forced to close down altogether their commodities trading operations, once a huge source of revenues, while others such as UBS have slashed the size of their fixed income business to remain profitable. Analysts predict that over at Goldman Sachs, a global powerhouse in credit, revenues could fall as much as 21 per cent over the year, denting profits. Stéphane Rambosson, Managing Partner of executive search firm, Veni Partners, said: “Pay will be disappointing for a lot of people this year because overall the industry  is under pressure on costs, while the fixed income trading businesses, which are so crucial to big banks' profits, had a tough year.“

Banking pay has become a battleground since the financial crisis of 2008, by which time high finance had stopped playing by the rules adopted by most other industries, putting the pay of its top performers before the returns of its shareholders.  Much has changed, as guaranteed cash bonuses that rewarded bankers regardless of performance were outlawed in favour of deferred deals that included a bigger proportion of pay-outs in shares. And with banking profits hit hard in recent times, the heyday of the multi-million pound payout appeared to be over. To compound bankers’ woes, from 2014, a new European Union law will prevent bankers earning more than 50 per cent of their annual salary in bonus, or 100 per cent with shareholder approval. That makes this year’s bonus round something of a last hurrah.

Faced by such irritations plaguing the megabanks, many of the old-school rainmakers have used the financial crisis as an opportunity to strike out on their own and form their own boutiques, and some of these small independent “shops” are enjoying a bigger piece of the action. These include Moelis, which was launched by its eponymous US founder Ken Moelis in 2007, and which worked as sole adviser to US advertising giant Omnicom on its merger with French rival Publicis over the summer. Meanwhile Simon Warshaw, a veteran UBS banker who advised Vodafone on the Verizon deal, has since left to form a boutique  former Morgan Stanley titan Simon Robey and Simon Robertson, a former Goldman Sachs rainmaker. Brothers Yoel and Michael Zaoui who used to spar across the table as dealmakers at Goldman and Morgan respectively, also formed their own company last year. Boutiques do not face any of the pay curbs at the big firms they used to work for, giving the owners the discretion to award themselves whatever they deem fit. Expect pay for the top brass in such boutiques to be counted in the many millions this year.

But don’t expect the winners to brag too much in public, because for every winner, there will be more losers. Plus, rushing out to splurge the cash on a new Ferrari is not seen as good form when the whiff or redundancies and regulation still hangs heavy on the air. Nor is it possible, now that the cash portion of bonuses has been reduced in favour of shares which bankers cannot cash in for years.

Those Bentley and Porsche showrooms in Mayfair, who in the pre-crisis days enjoyed champagne spring seasons thanks to bonus-fuelled bankers, will have to survive once again this year on the largesse of foreign billionaires.

Luckily, there are still plenty of those to go around.

Gold plated: Bull market car regs

Number plates celebrating the return of the bull market have been listed for tens of thousands of pounds on the Bloomberg financial website.

Among others, the number plate BU11 MKT has appeared in the small ads section of the financial news service, priced at £25,000.

Flush bankers can use the code “POSH” to call up the listings, which also include BU11 ESH for £15,000 and CA11 PUT – a reference to trading options – for £25,000.

Thriftier investors can  bag themselves a bargain, with BU11 YSH –  a snip at £750.

Chloe Hamilton

Arts and Entertainment
From Mean Girls to Mamet: Lindsay Lohan
Nathaniel Clyne (No 2) drives home his side's second goal past Arsenal’s David Ospina at the Emirates
footballArsenal 1 Southampton 2: Arsène Wenger pays the price for picking reserve side in Capital One Cup
Mike Tyson has led an appalling and sad life, but are we not a country that gives second chances?
peopleFormer boxer 'watched over' crash victim until ambulance arrived
Arts and Entertainment
Geena Davis, founder and chair of the Geena Davis Institute on Gender in Media
travelGallery And yes, it is indoors
ebooksAn unforgettable anthology of contemporary reportage
Life and Style
Arts and Entertainment
The Tiger Who Came To Tea
booksJudith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed'
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

IT Project manager - Web E-commerce

£65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world