x Abu Dhabi, UAEWednesday 26 July 2017

Why bankers deserve those lavish bonuses

"Daddy, are you a banker?" asked one of my daughters yesterday. My first impulse was to cuff the tyke about the ears and send her to bed without any supper.

"Daddy, are you a banker?" asked one of my daughters yesterday. My first impulse was to cuff the tyke about the ears and send her to bed without any supper, but having first vehemently denied the treacherous accusation, I asked her why the sudden interest. "Because if so, we'd be rich," she replied. I patiently explained to her that there are few people less suited to a career in finance than her father. I have trouble with mental arithmetic, no concept of rates of return or financial risk and every investment I make is a dud.

Then it occurred to me that none of these failings would prevent me from becoming a banker, not if their behaviour over the past few years is anything to go by. I suspect that nobody knows anything about banking except, perhaps, Warren Buffett. This doesn't prevent them from running round the world in pinstriped suits pretending otherwise. It is financial legend that John Pierpont Morgan or Nelson Rockefeller or some other titan of Wall Street decided it was time to sell his stock portfolio and avoid the Crash of 1929 when his bootblack started giving him share tips.

In a similar fashion, I wonder whether a banker's time has come and gone when even my nine-year-old daughter thinks it is a profitable profession. Alistair Darling, the UK chancellor of the exchequer, just like my daughter, has finally woken up to the fact that bankers have the money. This week he bowed to public opinion and imposed a special windfall tax of 50 per cent on their bonuses for this year.

Fleet Street went wild with delight - or at least stopped pouring buckets of compost over him for a day. I rarely speak up for bankers, but I fear this time I must make an exception. Benedetto Croce, an Italian politician and writer, posed the philosophical riddle last century that you could never accuse an Italian of not being a member of the Catholic Church. Whether lapsed or not, for him Catholicism was central to an Italian's DNA.

In a similar fashion, Italy's president Silvio Berlusconi is now embroiled in newspaper smears linking him to the mafia. My ebullient father-in-law ridicules this notion. "You cannot govern Italy and not have links to the mafia," he says. "Both Catholicism and the mafia are integral to life in Italy. To suggest otherwise is absurd." Likewise, bankers go into banking to receive bonuses, as any nine-year-old girl or finance minister will tell you. Unlike journalists, who are given a measly Christmas pudding from their employers (if they are lucky), bankers approach the New Year with a spring in their step.

If things have gone according to plan and their bank has made money, an event that normally happens even if the rest of the world has had to give it to them, they can expect to share in the spoils. Unlike the mantra that the rest of us have to live with, straight out of Alice's Adventures in Wonderland of "jam tomorrow, jam yesterday - but never jam today", bankers can expect to have jam smeared round their faces anytime soon and a smile the size of the Cheshire Cat's.

But is the game up? Should those smiles be wiped off their faces? I don't think so, nor do I think they should ever be. Just as an Italian politician might have links to the mafia or the Catholic Church, so should a banker receive a hefty annual bonus. This allows them to pay their annual golf club subscriptions, keep up their payment on their Porsches and even keep their braying, toxic wives at bay.

Whether they might have other calls on their fortunes, as Tiger Woods appears to do, is none of our business. While we must insist on transparency in banking circles, we should draw a veil over their private lives. This reminds me of the partner in Clifford Chance, one of London's leading law firms, who took a group of financial journalists on an excursion down the River Thames as a bonding exercise.

After a few hours they docked and the proceedings continued, replete with food and adult beverages and serious conversation about London's legal framework. Everyone, including Clifford Chance's harassed public relations people, agreed the evening had been a success. Then the partner suggested, "Stringfellows, anyone?" For those of you who have led a sheltered life, I should explain that Stringfellows is a popular meeting place in Soho where bankers and lawyers can meet ladies younger than their wives. (Tiger Woods would probably like it there.)

Next day the newspapers were full of news about Clifford Chance, mainly on the late-night antics of the partner rather than his rather dry prognostications of the laws of the Eurobond market. My concern is not only that if bankers failed to get their annual bonuses, such haunts would suffer. Banks attract the bright, hard-working youth who are very greedy. They are safely contained in specific parts of Wall Street and the City of London so we can keep an eye on them.

And now that the governments of the world own many of them, there is an incentive on keeping bonuses high, so that we can tax them until the pips squeak. @Email:rwright@thenational.ae