What's more, as the financial sector is huge and hugely diverse, it the cap will affect different people differently, depending on their activity, rank and their bank's nationality.
It was striking how virtually every interviewee professed great confidence that their bank would find a way around any new rules. Equally striking was just how depressed the atmosphere in large areas of the major banks seems to be these days. But perhaps most surprising was that even those in favour of more stringent regulation – of whom there are more than you might think – were in near-unanimous agreement that this cap was not helpful. What we need is "smart weapons" specifically targeting the toxic corners of finance, they said; what we get is carpet-bombing.
Equity sales (director level) at major bank (male, mid 40s)
People on the trading floor talk about the cap, absolutely. There is an understanding that the political class must be seen to be doing something. But this idea that all investment bankers are the same, that our only wish in life is to take as much risk as we can, all for that number on bonus day … I am in equity, meaning we recommend and trade shares for institutional investors. There is no risk I could take, even if I wanted to, in order to increase revenue. It's all just bloody hard work.
I hear colleagues wonder: if Mr Brussels cuts my pay to such a degree, do I still want to deal with the pressure, still put in the hours where I get up at 5am and not leave the office before 8pm? There is great confidence that banks will find ways around this, though – they always do. I hear people talk about setting up their own company and contracting themselves out to the bank.
Financial recruiter (male, early 30s)
Clients I talk to were genuinely shocked when the news came out. They were expecting a cap of maybe three times salary. Everyone is sticking their heads in the sand, for now. Still, what are people's options? If you are a bog-standard trader you make maybe £400k, of which £150k is base pay. With this cap that goes to £300k. So after tax you get £50k less. Are you really going to move to New York or Asia for £50k? Senior people have families; it's not only money. Also, if you are trading European markets from New York, that means the night desk for you, with the time difference.
All the talent is in London. If, as a bank or hedge fund, you move to a much smaller centre and you need to fill a role, your options are so much more limited. People like London. Maybe not now, after four months of rain and cold, but this is a nice place to live.
No one really knows about this EU cap. We hear it is postponed to 2014 and there's lots of confusion still. Banks are all working for ways around it so I'm sure I won't be as bad as people say. Then again, mate, the market is fucked. No one has any visibility, comps [pay] are tumbling, caps everywhere. The industry is on its knees.
By "no visibility" I mean as in people work hard but have no idea if they will get paid, if markets will really improve, if industry is fundamentally changing etc. These guys are not used to be in the dark like that. It is quite telling that everyone is depressed and worried yet no one seems to know where we're heading. Early signs of optimism – "it will all be OK eventually" – have all but disappeared.
Investment strategist at boutique firm (male, early 30s)
This is obviously good for smaller boutiques who are unlikely to be affected by these regulations and can pay in hard cash – such as ourselves!
The public seem to see bonuses as rewards for exceptional performance but, really, they are more about giving banks flexibility. I think the cap is likely to push up salaries, making the business model of large banks even more unstable and susceptible to economic swings. It is so much harder to lower salaries. Because if it were easy to adjust base pay, it would become almost, well, a bonus?
Ultimately the only solution to systemic risk is to break apart the big banks and remove any sort of government backstop.
Former structured products builder at major bank (male, late 30s)
I don't think I would have left if the bonus cap had come into effect during my time at the bank. I have always been grateful for what I was getting. I'd say we'd have lost 10-20% of our staff … Younger people don't mind moving, but I have a family. I wouldn't have liked to work in the US and Asia is too far away.
I would work with trading floors in Germany, the Netherlands, Belgium, Scandinavia. Traders there get a really good salary, for local standards, but a bonus of maybe 25-75%, max. The atmosphere is quite different from London. So, yes, huge bonuses create a bonus culture. Still, many of these European banks blew up.
What will happen with the cap: the greedy talent will go into hedge funds and private equity. That's where the real money is. And hedge funds and PE are still virtually unregulated.
Managing director (advisory) at major European bank (male, late 40s)
Base salaries have doubled or tripled over the past years, making bonuses less important. Still, without a bonus I'd have to sell my house, eventually. Also, there are school fees. Many people are in this position.
I am in "advisory", acting as middleman between corporations in need of loans and investors looking for a place to put their money. I work hard, sometimes coming home at 6am, just when my wife wakes up.
I am confident the bank will continue to find ways to pay us what we deserve. If not I will have to reconsider my options. Leave Europe, leave banking. The thing is, my clients are in Europe and I need to see them in person, regularly. Flying in and out from the US or Asia just doesn't work.
Setting up a boutique would save me from all the compliance; with all the new regulation this is now taking insane amounts of time. But striking out for myself doesn't work either, as my clients want access to a big balance sheet.
Corporate finance analyst at partially state-owned bank (female, mid 20s)
Your bonus is your job, they have told us at the bank. Seriously, what can we do? There just aren't any jobs to go to. My base salary is £45k. Bonuses? Well, for people like us it's maybe a few percent, which makes us, let's say, not overly concerned with the bonus cap; what's there to cap? Yes, I make twice what a policeman makes; then again, I work twice his hours. If he takes two jobs, we make the same.
Quite apart from any bonus cap, there is now a deep and growing divide between the American giants who can still pay big bucks for the best talent, and the other big banks. Maybe Deutsche Bank can cling on; the rest of us in Europe and Britain now are decidedly in the second league. Barclays can keep up, perhaps. We'll see.
Vice-president at cash equities firm (male, 30s)
I am a basically leftwing guy and this cap is pissing me off a lot more than I thought it would. My income won't be affected but it's a measure that makes basically no sense at all except as a bunch of politicians wanting to generate headlines by doing a high-profile "screw you" to an unpopular constituency. This cap is going to move activity out of the regulated sector.
Why are bonuses so important to us? When you're all in by 2pm and you've made 90 phone calls on a deal, the thing that gets you to make 50 more is the fact that the team all know that we need to put in the effort and we'll all get paid. It's an awful thing to see, the way that the wind goes out of a dealing floor at some point in the year when it becomes clear that [usually because of a loss somewhere else in the bank] the pool is gone."
Managing director on trading floor of US bank in London, (female, late 30s)
People are so battered by the recent waves of redundancies that they seem to have simply put the bonus cap on to one side. Recently we lost over 25% of people at my level, so if you ask around about a cap that may go into effect in 2014, they will [say]: let's see if I'm still around by then.
Generally speaking, people expect our bank to find a way. If we can come up with solutions for the new Basel III capital rules and all the other regulation, then we'll work something out. What seems sure, though, is that the "global heads" who are not tied to Europe will all move back to the United States.
Derivatives trader at major bank (male, early 40s)
This cap threatens to affect me considerably, yes. I took this job under the assumption that at some point in the future I will be making several multiples of my salary. The cap puts that under threat.
It's ridiculous to think that a cap stops risk-taking. You want traders to be as aggressive as they can and make the bank as much money as possible, within their risk limits. Traders are like tigers, and their risk limits their cages. It's about policing those cages. Risk management needs to be independent, meaning traders' bosses can't overrule them.
Remuneration is becoming so complex. Part of your pay is deferred stock, so you need to ask: how will the bank perform overall? Are you at a subsidiary or the parent company, and how far is one from the other? These days a job interview is really a two-way affair. Does the bank want you, and do you want the bank?
Former Treasury officer in bailed-out bank (male, early 50s)
Back when I was at the bank, the bonus drove you to take risk and make money, and it was a symbol of the "big swinging dick". Looking at how people reacted to the bonus austerity after 2008, there was a sense of the remuneration not being sufficient to entice you out of bed in the morning. So were an effective cap to induce a sense of lethargy, then it would serve to reduce risk taking.
An effective bonus cap in 2008 and before might have helped, at the margin. But in my understanding the cap is only restricting the short-term cash element. If stock markets reward high profits and risk with a higher share price, then management at these banks who receive large stock-related bonuses will still have an incentive to take risk.
Joris Luyendijk is an anthropologist who has been studying the City since the credit crunch. Read more of his findings at www.guardian.co.uk/commentisfree/joris-luyendijk-banking-blog
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