Morning Coffee: Very bad news about British bonus deferrals. What bankers can learn from Andy Murray

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Andy Murray

Bankers' new mentor

While Britain is basking in the hot glow of Andy Murray's Wimbledon win and a spate of unadulterated sun, Britain's bankers have been given a blast of Siberian air this morning with the news that George Osborne is partial to the concept that banking bonuses should be deferred for a mandatory ten years.

The Financial Times reports that Osborne will endorse almost all of the proposals made last month by the UK Parliamentary Commission on Banking Standards. Despite opposition from banks, the FT says Osborne is "supportive" of the commission's suggestion that bonuses should be deferred for up to 10 years.

This sounds ominous. British bankers are already subject to unusually stringent bonus restrictions as a result of European Union pay regulations. This stringency is due to increase anyway from January 2014, when the European Union's bonus cap takes effect. Overlaying European Union regulation with a new requirement to defer bonuses for up to ten years would make London the most unappealing financial centre in the world to work in.

We foresee two main outcomes from 10 year deferrals. In the first place, there would be a disincentive to earn more than £425k, as this is the rate at which deferrals would likely take effect. In the second place, salaries in London would increase substantially and banks will think twice about hiring too many people in the City.

Separately, British bankers could learn things from Andy Murray. Breaking Views points out that Murray used to be quite unpopular due to a "distant and aloof" manner. But he changed: he cried publicly after losing in 2012 and then he admitted that he wanted to win. Now the British public loves him and in an industry dominated by foreign talent (like banking), Murray has triumphed. Murray also underscores the importance of sleep: he has 12 hours a night; most people in banking have half that.


George Osborne will dismiss the banking commission's suggestion to impose tighter limits on the leverage ratio of banks. (Telegraph)

36 year-old head of energy trading at Barclays says he's left the bank. (Bloomberg)  

Jean Pierre Mustier, ex-SocGen head of investment banking: “In the 1990s the battlefield was about derivatives; in 2013 it’s about transaction banking. This is where profitability will be generated.” (Financial Times) 

Bankers at rival firms talk admiringly about how Bank of America Merrill Lynch has combined its corporate and investment banking divisions, made astute hires in the past year or so and put its balance sheet to work in a targeted but aggressive manner. (Financial News) 

After starting with 30 clients, Meredith Whitney has dwindled to 14 .Her full time investment staff numbers have fallen from 5 to 1.(WSJ)

Meredith Whitney says banking analysts are not really very sexy. (Financial Times) 

The market for M&A has been more like a music tour canceled due to a lack of interest. The band isn’t just breaking up; it never seemed to get back together. (WSJ)

There are precisely 4,296 people with more than $30m in London. This is 1,142 more than in Singapore. (MarketWatch)

Center Parks is creating 1,500 jobs. Including: 53 spa therapists. (TheTimes) 

(Morning Coffee has replaced Lunchtime Links for the foreseeable future.)