Page last updated at 22:55 GMT, Monday, 30 March 2009 23:55 UK

City Diaries: 31 March 2009

Man looking at a falling graph

The G20 protestors, the public's perception of bankers and the collapse of Dunfermline Building Society all feature in this instalment of the City Diaries.

These diaries are written by people who work in finance and have had a front row seat as their industry goes through the biggest changes in decades.

They give us regular insiders' updates on the mood in the City of London and the dramatic changes in the world of finance.

LAURA

Laura (not her real name) works for a commercial bank in London.

The spectre of the great unwashed threatening physical violence against bank staff during the G20 summit is proving to be a galvanising force in our industry
Change for change's sake is never a positive step and at the moment it would be nice to have a chance to take stock and be allowed to do our jobs. Ironically the institution to give us that break may be the highest bank in the land - with Mervyn King's statement last week.

The spectre of the great unwashed threatening physical violence against bank staff during the G20 summit is proving to be a galvanising force in our industry. The phrase "you bankers are all the same" is just the latest in a long list of people who have become depersonalised by the public along with 'you council people' and 'you politicians'. You may point out that there are some individuals in banking who have remained individuals but Fred Goodwin is just as much a bogey man for the rest of us.

The danger of depersonalisation means that the cashier on less than average wage is as likely a target as the handful of people on over £1m a year and really where does it stop? The protestors will most likely smash windows of the local NatWest branch or McDonalds but all that achieves is the terrorisation of private individuals who are as much victims in this whole debacle as taxpayers.

If you are angry at bank profits in years past then pause for a moment to work out where much of your private pension is invested - in bank shares. What sector accounts for much of the 10% decline in corporate tax revenues that funds your child's school or your local GP - banking.

Unjust persecution of an entire industry will provoke a defence mechanism which may just see your nose cut off to spite your face. Next time you come in looking for a mortgage slightly above what you can really afford don't be surprised if it's not forthcoming.


ANTHONY

Anthony (not his real name) works for an investment bank in the City

The hardest thing to take about the furore around bonuses is that all employees of financial services firms are being tarred with the same brush irrespective of the size of their bonus or whether they were personally responsible for the mess we are in.

The securitisation gurus who packaged up the sub-prime assets that turned toxic were only a tiny fraction of the employees who work for these firms and yet everybody is suffering for their mistakes.

The vitriol levelled at bankers is disturbing with suggestions that we should commit suicide and take compulsory courses in morality
If you are a 20-year-old cashier in a high street bank with a salary below the national average, you might feel aggrieved to be singled out for blame. If that cashier worked for Lloyds Bank, she might feel even more aggrieved that after a nod from the Prime Minister, the board of directors of that normally risk-averse institution agreed to take over HBOS and plunge the company into disaster destroying the value of the few shares she had accumulated through a Save as You Earn scheme.

The vitriol levelled at bankers is disturbing with suggestions that we should commit suicide and take compulsory courses in morality. It's interesting that bankers are being asked by politicians to repay bonuses because it is morally right!

Jacqui Smith
Anthony compares MPs expenses with City bonuses
Will Tony McNulty or Jacqui Smith repay their living expenses because it is morally reprehensible that they should claim expenses for homes that belong to relatives? Let us also not forget the bonuses paid to FSA staff despite their incompetence in supervising the likes of Northern Rock. The FSA supervisor of Northern Rock did resign but nobody has asked him to pay back his pension.

These politicians have not broken the law but neither have the bankers? I am not a supporter of Fred the Shred but throwing bricks through his window and levelling abuse at his children forcing him to remove them from school is unjustified and has been encouraged by politicians who want to distract Joe Public from the real issue of economic meltdown. I am genuinely dreading coming into the City on 1 April when we are reliably told that protesters are mounting a "bash a banker" protest which the police are warning could involve violence.

I may work for an investment bank but don't have a Porsche. I have a long commute because I cannot afford to live in central London and my salary including bonus has fallen by nearly 20% over the last two years. We still work long hours but don't get paid overtime. We are also experiencing huge redundancies.

My point is that the vast majority of financial services employees are taking their share of the pain for something they did not have anything to do with.

Being made redundant in an investment bank is not very pleasant. I came into work the other day and said hello to a colleague who sits near me. At 10am his office was empty and remained so all day. It was only then that I discovered that he had been 'let go' - nobody likes the word redundant). He was a guy I had worked with for over seven years and had not been able to say goodbye.

I am sorry if this sounds like I am bleating and I am really not asking for sympathy but the mood in the office has become pretty dire. I read a report in the Times today that stress and depression related illness in City workers has risen sharply and frankly I am not surprised.


MARK

Mark (not his real name) currently works for a stockbroker outside London.

Dunfermline building society branch
The UK Government ruled out a bailout for the building society
It is strange that £26m no longer registers in the business quarters but that is exactly how I felt when I heard that Dunfermline Building Society collapsed after generating losses of £26m. Twenty six million? Hardly worth a mention. If you have not lost billions, don't bother! We now talk in trillions now, not millions! Of course, I jest, and the loss of another financial institution is a worry, especially one that has survived since its inception in 1869. Last week a little bit of confidence was creeping back but this type of situation shows that the next collapse is just around the corner.

Quantitative easing. Fiscal stimulus. Money market expansion. Buzz words in the current economic crisis. Now while someone more learned than myself might choose to explain the meanings of these words to the man on the street, it basically means getting people spending again. This is why our government has chosen to reduce interest rates to a mere 0.5%. Bad news for savers, good news for those on tracker or variable rate mortgages that stand to save. I myself, now pay 1.85% for my mortgage, saving me 30% on what I was paying a year ago. Those on interest only mortgages have saved even more. However, has it actually worked? Are people spending the extra disposal income they now have?

Before I give my opinion on this question in the context of the wider economy, I thought I would give you my own personal perspective.

I am saving hundreds of pounds on mortgage repayments each month but to be honest, I am not really spending this money. It is all going to reduce my debt. I have a modest amount on a credit card but had two cars on finance deals. The one with only a few months until it finished has been paid off while I have also began paying off more on my credit cards, that debt will be cleared very soon.

Twenty pound notes being handed over
Holiday plans are being shelved while expenditure on items such as football season tickets, deemed 'essentia' by the men only a year ago, are under scrutiny.
I intend to make small overpayments on my mortgage. Not huge amounts but a little something, probably the difference between the base rates being 1% and 0.5% will go in as an overpayment. I am spending less and the money that is left at the end of the month is going away for a rainy day. Holiday plans are shelved this year although I am planning something for next year. Finally, some shares are cheap and I am looking at picking up some of these in the near future. Although savings rates are terrible, I still putting something away as you never know if the dreaded 'r' word, redundancy, will come your way.

In a straw poll of those around me in the office, my scenario is very similar to others. Most are looking to reduce any debt, make overpayments and not make any big ticket purchases. No one is willing to take on large orders for fear of losing their jobs.

Holiday plans are being shelved while expenditure on items such as football season tickets, deemed 'essential' by the men only a year ago, are under scrutiny.

Those not on the property ladder however, have seen no benefit. A colleague, a first time buyer with a 15% deposit, is being quoted a fixed rate mortgage of nearly 6%. This is only fifty basis points lower than what I was offered some 12 months ago (I went with a tracker) and base rates have tumbled. Properties might be cheap but the mortgages are certainly not!

In short, confidence has to return to the economy. Unless jobs start looking safer, people will not choose to spend.



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