Top bankers fuel luxury boom

SALES of Rolls-Royces, Bentleys and Ferraris in London are at an all-time high and estate agents are braced for a new boom in £1m properties, reflecting the return of soaring Christmas bonuses at the top end of financial markets.

But for the majority of middle and lower-ranking workers in the Square Mile, expectations of a bumper Christmas are likely to have been dashed.

Insiders in the City and Canary Wharf confidently predict bonuses starting at £500,000 a head for top market performers, rising to £2m for those investment bankers involved in the slowly-returning mergers and acquisitions business.

While bonus increases in general are reckoned to be flat, or at best in single digits, leading investment bankers and fund managers are said to be raking in up to 40%. And that is feeding in to big-ticket personal spending.

Nick Lancaster, managing director of HR Owen, the Mayfair and Kensington dealer in Rolls-Royce, Bentley, Ferrari, Lamborghini and Maserati, said: 'We have record order books and we've had our best-ever trading at the very top end. The people with money seem to have made a lot more.'

But he believes sales across his group - HR Owen also sells Volvos and Audis - reflect how the money is being doled out in the City. 'Sales in the medium to lower end of the market have been much tougher. It seems they have not had the big bonuses.'

While economists are forecasting a slowdown in the wider housing market, estate agents in the banker belt of Chelsea, Kensington and Fulham - where homes routinely sell for between £750,000 and £2m - are predicting better times.

Liam Bailey at Knight Frank, said: 'We noticed an upswing in viewings in early October when bankers started to get a feel for how much they were going to get. The number of viewings has been way in advance of last year and we are anticipating a busy sales market in the New Year.'

David Atkins, of pay specialists the Monks Partnership, said: 'There does seem to be some holding back, some pressure on bonuses being only paid to the key people, the individuals who keep a team together. The banks are identifying the people who might be poached and adjusting the size of bonus accordingly.'

Evidence at a sex discrimination case this week showed how apparently arbitrary bonuses can be for high fliers at the big US banks. Though Merrill Lynch high-flier Stephanie Villalba lost the main case, it revealed startling differences in bonus pay.

Villalba's private-client broking colleague, Japan chief Junji Okabayashi - at more than $200,000 a year (£104,000) - gets far more basic pay than Hong Kong counterpart Albert Lee, but their bonuses last year were rounded up to ensure both got total pay of $1.05m.

Their former boss, Claudio Aguirre, got a basic $190,000 but between 1998 and 2002 won $16.5m in bonuses. Then he quit to set up an investment business.