Ronnie Armist, executive director at Stonehage Investment Partners, an adviser to very wealthy families, said: “What has driven a lot of demand in the luxury goods sector has been the emerging markets countries like China and the Middle Eastern countries, not the bankers.”
In the property market, too, bankers are not the force they were. New rules requiring a greater portion of City bonuses to be deferred have changed the rhythm of spending and the financial crisis has hit purchasing power.
Ed Mead, director at Douglas and Gordon, the estate agent, said: “In a normal year before 2008 you’d find 20 percent of the £2 million-plus market was attributable to ‘City money’. That has fallen dramatically. Now at least 65 percent of the market is driven by foreign money.”
“Bankers are finding themselves a little less liquid, shall we say,” Mr Mead said. “Those who run teams in the City are finding themselves very squeezed. Anecdotally, we hear they are selling wine collections and Aston Martins to keep up the lifestyle.”
Corney & Barrow, a City wine retailer, said the Square Mile was still an important part of its business but growth was increasingly centred on Asia. Adam Brett-Smith, managing director, said: “We love the City, no question. But you don’t want to have all your eggs in one City basket. We diversified into other areas post-Big Bang, with the decline of the board dining room culture.”
Banking bonuses still matter to the luxury sector but were becoming “less conspicuous”, according to James Lawson, a director at Ledbury Research, a luxury consultancy.
“Until five years ago there was close to a well-trodden path of bonus spending,” he said. “The first sizeable bonus might have gone on say, watches and clothing. The next year’s an entry level sports car, then a first property, followed by a high performance car, then a larger house. When the financial crisis struck, these sectors were among the worst affected.”
Public anger over bank pay has forced politicians and regulators to try to rein in what they see as excessive payouts.
In April, the European parliament proposed awards should not exceed annual salary for senior bankers, prompting a compromise proposal last month from Wolfgang Schäuble, German finance minister, under which only cash bonuses would be subject to such a limit.