Harry Mount: Shame - not a word bankers use very much

In the inflated world of Sir Fred Goodwin, there can never be enough noughts on the end
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The Independent Online

The oddest day in my banking career came about 15 years ago, during bonus season. Simon, a schoolfriend working at a rival bank, rang me up on the verge of tears. "Terrible news," he said. "I only got 350."

Simon, a single man in his mid-twenties with no outgoings except for a small mortgage on his Earls Court flat, had just found out what his bonus would be: £350,000. And he was inconsolable. That morning, everyone at his investment management firm had come into work to find an envelope on their desk. In each one was a cheque made out for anything from £100,000 to £28m.

Moments after opening their envelopes, the bankers had never looked so miserable. The only content person was the one with the £28m cheque. All the rest were incensed because they had got less than colleagues they thought weren't as good as they were.

You might think this is greed on a pretty monstrous scale; the same sort of greed that has led Sir Fred Goodwin to cling on to his £693,000 annual pension. I don't know Sir Fred, but I did know Simon and plenty of bankers like him whom I worked with at Robert Fleming & Co, another former titan of the Scottish banking world, founded by Ian Fleming's grandfather in Dundee in 1873, and bought by Chase Manhattan for £4.8bn in 2000. And they weren't particularly greedy people: the range of their greed is no greater than the range in the world of law or journalism, where I've also worked.

In the days before Sir Fred led the Royal Bank of Scotland to the worst corporate failure in British financial history, Scottish banks had a tremendous reputation for financial probity allied to the traditional Caledonian carefulness with the bawbies. So what had happened to Simon to turn him into this money-crazed figure, sitting at his work station, teardrops splattering a cheque for £350,000?

A huge tidal wave of cash is what had happened. Until the credit crunch hit, the past 15 years have brought a banking bonanza the like of which the world has never seen before.

After Mrs Thatcher deregulated the City in the 1986 Big Bang, and once Black Wednesday on 16 September 1992 was out of the way and Britain had exited the ERM, bankers moved into a new salary stratosphere.

Half a century ago, bankers earned just a little more than lawyers or journalists. Nowadays, the difference in salary between bankers and their fellow university graduates is so vast that they live entirely different lives. A sort of geographical apartheid kicked in. Only a banker could afford to buy a house in the centre of town, while non-banking graduates moved into shoeboxes in central London, small houses in the suburbs, or larger ones out in the sticks. With this vast gulf in living standards, it's not surprising that bankers such as Sir Fred began to see themselves as somehow separated from the rest of the world.

At one party held by a fellow banker in the mid-1990s, I met an otherwise intelligent venture capitalist who said, in all seriousness: "There are only three jobs: law, banking and management consultancy."

You could see how such madness developed. If you are earning a million pounds a year, it seems extraordinary that anyone would choose to do anything else. The pitfall of this gilt-edged view of the world is that money becomes the one arbiter of success. Whether you enjoy your job is neither here nor there – or even whether you're good at it. All that matters is the size of the cheque in the envelope. That's how you judge yourself; that's how you compare yourself to your banking contemporaries and that's how they judge you.

Everything has a price, however esoteric. At a recent dinner with a classics professor friend, a banker asked him what he did. "Well, I've just finished a translation of Plato's Protagoras," said the philosopher.

"And how much did you get for that?"

"About £6,000."

"And how long did that take you?"

"A couple of years."

"So," said the banker, doing the mental arithmetic, "if you were working a 40-hour week, that's around £1.50 an hour."

In a world where everything, including Platonic dialogues, is manically priced, too much is never enough. One friend at Fleming's was told by his banker father that he would never be properly rich – this friend was on several hundred thousand pounds a year in the mid-1990s – because his childhood hadn't been deprived enough.

You might think that the sums earned by Sir Fred Goodwin over his career are so vast that it can't matter much whether his pension is £693,000 a year or £69,000. But, in fact, the money is all that matters. When he waived a year's pay in October – about £4m – it would have been an enormous body blow to his pride, even though the RBS board doubled his pension pot from £8m to £16.6m in the process.

It won't be moral disapproval from the outside world that will shame Sir Fred into voluntarily giving up some of his pension. In his world, where it is money that brings praise, status and self-worth, the only thing that will bring any shame is knocking noughts off his income.