Luxury Institute News

December 30, 2010

Wall St bankers, publicly modest, eye fancy toys

Wall Street execs research pricey goods ahead of bonuses
* Red Ferraris, Hublot watches still on most-wanted lists

By Phil Wahba
Reuters
Wednesday, December 29, 2010

NEW YORK, Dec 29 (Reuters) – Wall Street executives may face smaller bonuses and a public that still eyes them with suspicion, but that isn’t stopping them from rediscovering their love of luxury cars, oceanfront homes and private jets.

A soaring stock market, a surge in merger deals and an uptick in hiring on Wall Street are allowing bankers to gradually return to the lavish lifestyles they enjoyed until the 2008 financial crisis came crashing down on their party.

Despite talk of bonus cuts, many businesses that cater to bankers’ whims, such as the luxury car dealerships on Manhattan’s Park Avenue, are teeming with Wall Street suits.

“Even if they are worried about bonuses, their egos are involved here,” said one dealership manager, who said requests have been filing in for $225,000 crimson red Ferraris and $170,000 Audi R8 convertibles.

Wall Street paid out $20.3 billion in bonuses for 2009, and the numbers for 2010 are expected to be up modestly, according to various estimates, including one from New York’s comptroller.

Hedge fund managers and investment bankers who advise on mergers should see some of the biggest increases, while bond traders can expect cuts of as much as 30 percent.

Financial industry employees will find out in January how big a bonus they’ll get, and those who aren’t sure if they’ll get much seem to be waiting before they spend lavishly.

Nonetheless, there are enough Wall Street tycoons expecting big paydays to feed luxury spending.

Swiss-made Hublot watches, which cost 6,500 euros ($8,500) on average, are still regarded as success symbols and remain popular in London’s City and on Wall Street. Chief Executive Jean-Claude Biver of Hublot, part of LVMH (LVMH.PA), told Reuters that December would be a record month.

“They still want their toys,” Luxury Institute CEO Milton Pedraza said of bankers.

Financial industry honchos have wasted no time lining up rentals months in advance in the Hamptons, a string of seaside hamlets on Long Island where New York’s elite summers.

One top banker shelled out $200,000 to rent an oceanfront house in Amagansett on Long Island for the month of August, said Paul Brennan, a Prudential Douglas Elliman broker.

Wall Street’s money is trickling back down to companies like Avantair (AAIR.OB), which offers private jet timeshares. John Colucci, Avantair’s executive vice president, said inquiries are up this year though many are waiting for their bonuses before actually committing.

Click the link to read the entire article: http://www.reuters.com/article/idUSN2927380420101229?pageNumber=1

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