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Bankers Are Like Domino's Pizza Franchises: Expert
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CNBC Assistant Web Producer
Bankers aren't really bankers, but are more like bookmakers and insurance agents, and they don't actually get bonuses, but profit share, Peter Brown, partner from MM&K, told CNBC Monday.
"This crisis has been caused by the fact that bankers aren't often bankers. Most of the people that are going to get bonuses are a combination of somebody that works at William Hill (UK bookmaker) and an insurance agent," Brown said.
The investment banking arms of large financial firms have come under massive political pressure in the wake of the economic crisis for their apparent excessive risk taking.
- Watch the full interview with Peter Brown above.
Large bonuses are widely thought to be a major part of the problem and responsible for the risk-taking culture. But Brown thinks it's more like a profit share at a Domino's Pizza franchise, than a bonus.
"A lot of bonuses aren't really bonuses, they're profit shares," he said.
"It's more like a franchise … it's more like Domino's Pizza [DPZ
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]. You buy a franchise, you buy a desk, you use Barclays' [BARC-LN
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] name, you trade with 20 people, you make a lot of money, you split it up at the end of the day," Brown said.
Even though the bankers work for a particular firm, they are responsible for generating their own profit and the bank just takes a share of it, Brown said. The banks do however, provide the investment capital and are ultimately responsible for any losses, which is unlike a pizza franchise.
"What in fact you've got in these banks is they rent their name to a group of 20 people who are experts at something. They use that name to trade and the deal is they split up the profits they make with their employer," he said.
The only difference is that unsuccessful Domino's Pizza franchises are allowed to go bust, he added.
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