Bonus clampdown leads bankers to plump for finance
City Bankers are increasingly turning to traditional finance packages like the rest of us to fund their extravagant car purchases – and it’s all down to curbs on bonuses, believes one premium finance house.
Oracle Finance, which funds thousands of cars favored by City bankers every year, have noticed the days of cash-rich money men shelling out for cars with a lump sum are becoming a thing of the past.
These days, as regulators affect how bankers are paid, Oracle Finance managing director Peter Brook says city workers are now taking out traditional funding packages to pay for their new Ferrari, Porsche and Lamborghini models.
“We’ve noticed a distinct trend of our traditional city customers looking at hire purchase, lease purchase and some of our more bespoke packages, instead of simply spending their annual bonus on a new car,” said Peter Brook.
“My finance team deals with a large number of bankers and city workers, and we’ve noticed their buying habits have changed dramatically. In the past, they’d simply shell out a lump sum on a car when they got their bonus – many luxury car dealerships relied on it.
“These days, with curbs on bonuses, we’re finding even city bankers need finance packages and we’re happy to provide them with flexible funding solutions to suit their needs.”
Oracle Finance has so far this year:
- Funded a £250,000 Ferrari 458 Italia for one banker on a PCP deal
- Provided finance for a stock broker who bought a £170,000 McLaren 12C on Hire Purchase
- Set up a lease purchase deal for an equities trader to buy a new £110,000 Porsche 911
Peter Brook added: “What is interesting is the fact city bankers are looking to invest in expensive cars again – something they cut back on during the credit crunch – it’s just the way they’re paying for them now has changed.”
The EU Bonus Cap, which took effect on January 1, 2014, means that bankers can no longer receive more than their salary in bonus, or twice as much if it is shareholder approved.
RBS have had their bonus plans blocked by the government, who own 81 per cent of the bank, and now fear they will lose top bankers. Some banks have sidestepped the new rules, but the UK Government and EU are looking at tightening the regulations further.