Page last updated at 22:27 GMT, Wednesday, 27 May 2009 23:27 UK

City Diaries: 28 May

Man looking at a falling graph

This week our diarists enjoy a little peace and quiet as attention is still focused on MPs and their expenses and not on the City.

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

Mourners gather at Kensington Palace to mark the passing of Diana Princess of Wales
Britain has gone through a series of 'Diana' moments, Laura says
Our country seems to have gone through a series of 'Diana' moments of mass spasmodic emotion over the last six months. I don't think it can be doing anyone's health any good. Just as the fury at Every Single Person who works in a bank (yes Mr Grounds Maintenance Man, that includes you) went on for far too long, so to is the MPs' expenses outrage.

Don't get me wrong - some of the claims under the Common's allowance system (note these are not technically expense claims) are more than dubious with some verging on fraud, but in what 'tolerant' society is it OK to lambast someone for claiming for mortgage interest money on a second home that we require them to have? Claiming for expensive furniture however may be a different matter.

You might think that recent events would discount any comments politicians might make about pay in the banking sector in our eyes but you would mostly be wrong. If you are trying to tie salary to economic worth you are doomed to fail.

With the attention being off the City we have enjoyed the opportunity to get on with our jobs
The footballer on £125k a week generates probably £20million in economic value to his industry. A banker who lends money to small businesses totalling £150million turnover will probably be on £70k a year. The Minister for Health, on a salary of circa £120k, is in charge of a budget of over £1billion a week and a department employing one million people. It's amazing how little time the British people spend spewing rage towards footballers salaries who earn more in a week than either a decent level business banker or cabinet member earn in a year.

With the attention being off the City we have enjoyed the opportunity to get on with our jobs - and guess what, business is doing pretty well as a result.

This week RBS has been preparing for another kicking by announcing staff bonuses. My hope is that people calm down and take a deep breath before once again threatening staff and ranting on talk radio, because I for one believe that for a bank to pay money to staff rather than its shareholders in the current climate suggests they actually deserve the money. Market favour is key, but remaining a viable business by keeping decent staff is even more important.

If the government comes out against the move I for one would like to remind them that they sanctioned bonus payments to all Northern Rock staff last Christmas. Now where is a court of public opinion when you need one?


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

I must admit I have rather enjoyed the continuous revelations about MPs' expenses over the last week or so, if only because it has pushed the nasty bankers out of the spotlight. I also could not resist a chuckle that one MP on the Treasury Select Committee, Sir Peter Viggers, has fallen foul in press revelations about his expenses.

People in the City approach the expenses issue in a rather pragmatic way
He (Sir Peter Viggers) spoke at one of the Committee sessions about the injection of capital by the government into RBS. He said: 'How much more angry should we be that the government has taken on commitments and made investments in banks without knowing, even now, the full extent on the tax payer's behalf.' Isn't this a case of the pot that calls the kettle black?

People in the City approach the expenses issue in a rather pragmatic way. City firms have whole departments dedicated to finding a way of reducing tax liabilities in a legitimate way.

They do not question the moral aspect of what they prefer to call tax planning. Applying that logic to MPs' expenses and the view in the City would be that they were acting within the rules and the rules were deliberately lax, which indicated that this was a reasonable way to supplement their income without incurring the voters' wrath about an old fashioned pay rise. In the City morals do not come into it which is probably why so many people outside the City detest the way we operate.

New York skyline
Anthony says he tries to minimise costs when he travels for business
But expenses are closely scrutinised in the City. I travel abroad for business quite a lot and if I go to New York I will always fly back overnight so that no work time is lost. When I go to Frankfurt I go there and back in the same day to avoid the expense of hotels.

Unfortunately, the resignation of Sir Victor Blank, the Chairman of Lloyds Bank shows that bankers are not completely out of trouble. I must admit I feel rather sorry for Sir Victor. He is a big man and I have seen him many a time driving around the City scrunched in a little electric bubble car, he clearly did not have delusions of grandeur unlike Fred the Shred.

At the time Sir Victor was cosy-ing up to the prime minister he had no idea as to the extent of the damage to the HBOS loan book. He did the government a favour and that has not been repaid. It is rather amusing that a banker who has lost the public trust should trust a politician who has also lost the public's trust. Ironic don't you think?

And while we are being ironic, note that the Bank of England is paying higher bonuses to staff.

Despite the lead from the Old Lady, have no fear bonuses will be capped. And regulation will be strengthened. The Basel Committee on Banking Supervision will be publishing extensive proposals over the next few months. The worry is that, with the regulators feeling guilty by their failure to properly regulate the banks, they will overreact. If they do, their actions will prolong the recession as they restrain the banks' ability to grow their business and provide credit.

But let me leave economics and end with a moral note which is often in short supply in the City. Let me tell you about a secret place that is well known in the City but often missed by tourists. It is called Postman's Park and is found just off King Edward Street. It is an oasis of peace. A place to reflect and forget the credit crunch.

There is a wall commemorating ordinary people who lost their lives trying to save others. One such hero is Mary Rogers, who was a stewardess on a ship called the Stella. She sacrificed her life giving up her life-belt and voluntarily going down with the sinking ship. There is a lesson here for politicians and bankers alike about honour and selflessness which we should all observe.


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

This week the story about MPs' expenses has detracted any publicity from financial services. In my opinion, it is an absolute disgrace that many of those who criticised the banking industry and financial services in general have been found with their own snouts in the trough so to speak. What is far more worrying is that these people are employed by the public, and I think this is a far greater concern than those paid by private corporations.

Mark says some of the expenses claims have been shocking
Expenses are part and parcel of business and I don't expect MPs to claim nothing, but the claims have been shocking.

The recession has hit trust in all areas of business, whether it is financial services or high street stores but Parliament is slightly different. In a restaurant in London recently, I was dining out with a business associate. Although talk strayed onto topics, such as MPs' expenses, this was a business meeting and over the two hours we discussed various elements of our business.

It was a claim that will go down in my expenses. I made the error, on the train home, of reviewing my receipts ensuring that I had it right for my expense claim. The two ladies on the same table seat as me looked at my suspiciously and then joked: 'You're not an MP are you?'

'Unfortunately not,' I replied, 'I could do with my moat cleaning!'

We got into discussions on expenses and after making her aware that I worked in financial services, she did ask whether anyone needed expenses 'on those salaries'.

I am not hugely religious but I think our materialistic society has contributed to our problems
Defending myself was always going to be difficult, she has a blinkered view based on items in the press and her mind was well and truly made up. However, I did try to convey that I don't earn a seven figure salary and, as someone that is based regionally, London is often very expensive. Unfortunately, as she believes all banks (I told her I did not work for a bank) are making a loss (they are not) and that financial services employees all earn ridiculous sums (they do not), expenses is just another example of what is wrong with the country and the industry. I did therefore, find it rather amusing that when she took a cup of tea and a slice of cake from the catering trolley she immediately asked for her receipt! Clearly, her expense claim was going to have £3 on it but because she is not in financial services, all is well!!

I am not hugely religious but I think our materialistic society has contributed to our problems, which is a a problem with modern society in general. Perhaps if we had a sense of community and weren't so worried about keeping up with the Jones', we might get on better.

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