Tweet About 25 years ago, I attended a briefing session about the then government's plans to privatise the organisation for which I worked, or rather on the opportunity to buy shares on special terms. The person doing the presentation had explained it all, including the role of the merchant bankers involved.
When it came to questions, a bluff plain-speaking engineer who originally hailed from London prefaced his remarks with the comment that he'd always thought that merchant, as an abbreviation for merchant banker, was cockney rhyming slang. He wasn't being complimentary, of course.
In those days, before the Tories had deregulated financial services, merchant banking was kept very much separate from retail banking, largely so that retail banking was not exposed to the higher level of risk which merchant bankers were able to take. It was a wise and sensible separation. Had it still been in place today, I suspect that the government could have allowed some of the risk-takers in the merchant banks to bring their businesses tumbling down - and the retail banks on the high street would have needed no consequential bail out.
One of the other differences between merchant banks and retail banks was that there was a culture of high levels of performance bonuses in the merchant sector, but this was uncommon, to say the least, in the retail sector. That's another distinction which has been blurred, and now it seems that the bankers (I suppose I'd better not call them merchants) who have done so much to destroy the banking system expect to receive their bonuses anyway.
Now, it may well be that there are a lot of people, at all levels, working in some divisions of the companies who actually have performed well, and their divisions have met their targets. But there can be no justification for paying large bonuses to the people who made the reckless gambles and lost.
It's interesting that the best justification that some have come up with for paying the bonuses is that these people are experts in their field, and are easily able to go and use their skills in other financial centres if they don't get the rewards they want here. Am I alone in wondering whether them taking their 'skill' and 'expertise' elsewhere might not be an entirely bad thing?
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