London bankers put bonus into luxury homes

The luxury end of the property market could get a boost of nearly £4 billion ($10 billion) from bonuses paid to star bankers in the City over the next few weeks, a study shows.

The Centre for Economics and Business Research estimated that half of bankers' bonuses end up in the higher end of the property market. It predicts banks will pay bonuses of £7.5 billion after earning big money last year from booming sharemarkets, mergers and acquisitions.

This is up more than 16 per cent from £6.4 billion estimated to have been paid out in bonuses at the same point last year.

Bankers receive bonuses on top of their annual salary. The average bonus will be about £23,000, although 3000 bankers could get a bonus of £1 million or more.

The centre says property is traditionally the biggest beneficiary of bankers' bonus cash, but it is also spent on cars, in retail and on plastic surgery.

The increase in financial market activity has led to the creation of 9500 additional jobs in the City of London financial sector, making a total of 325,500 for last year, the first time City jobs have risen beyond the previous peak of 324,000 reached in 2000 before the dotcom crash.

The research centre is expecting another 6300 increase in City jobs this year and, if there is a further rise in market activity, another double-digit rise in bonuses could be on the cards next year.

- REUTERS