Sarah Butcher, editor of eFinancialCareers, on why the real reverberations of the Big Bang are lost in the ether.
Thanks to the deluge of press coverage, this is unlikely to come as a great revelation, but last week was the 20th anniversary of the Big Bang - the moment on 27th October 1986 when the UK financial services industry was exposed to the full force of internationalisation.
After careful analysis (and ignoring major changes like the end of fixed commissions) we've identified several lesser reported practices that, for better or worse, have revolutionised the way the City works.
For the worse:
- Job security. Pre-Big Bang, employees were treated to jobs for life. But according to Philip Augar, a former head of broking at Schroders, 1,000 people 'left' the industry between the end of 1988 and 1989. This may seem small beer compared to the 20,000 the Centre for Economics and Business Research (CEBR) says were axed between 2001 and 2002. But it undoubtedly came as a shock to anyone accustomed to receiving annual Christmas hampers and carriage clocks upon retirement.
- Working hours. Before the earth-shattering event, Augar says the first train from Haselmere to London left at 7.15am. Nowadays, many bankers are sipping skinny lattes at their desks by dawn - and are still there by dusk.
For the better:
Headwear. Before the event, it's our understanding that bowler hats were a common site in the City. When BP floated in the early 1980s Cazenove's bankers all wore hard hats with a BP logo (according to last week's Telegraph). Today hard hats are indicative that wearers are risking cranial injury on two-wheeled vehicles.
- Headhunting. In the dark days pre-1986, headhunters were largely confined to Papua New Guinea. "I never answered headhunters' calls," explained one venerable dignitary at a reception held by the Lord Mayor to celebrate the twentieth anniversary of the Big Bang. "I was convinced I was working at the best firm." Nowadays a two-year guaranteed bonus will usually put a stop to that, and an entire industry has sprung up as a result.
- Pay. Partners did very well pre-Big Bang, but everyone else received bonuses equivalent to fractions rather than multiples of relatively modest salaries. American banks were the key force for change - one banker recalls that, when she started at Morgan Stanley in the late 1980s, she was paid 16,500 plus a 60% bonus. She says UK banks at the time were paying her counterparts 12,000 plus a 20% bonus.
Lastly, the Big Bang brought diversity. In Liar's Poker, former Salomon banker Michael Lewis observed that employees at the bank's London office in 1985 'tended to be refined products of the right schools.' If attendees of the Lord Mayor's reception were anything to go by, very few of those were women.
The dawn of the American banks may have brought a less genteel, harder culture, but it has also ushered in appreciation of the benefits of a varied workforce.
And without that, the City really would still be stuck in the nineteenth century.