Investment banks booming as RBS chief nets pay deal

<div>INVESTMENT banks are on course for a year of record profits, as they take advantage of dwindling competition to hoover up business from governments and companies raising money in the markets.<br /><br />Bankers at Goldman Sachs are expecting mammoth bonuses, after the investment banking division booked profits of more than &pound;500m in the first quarter, nearly half of the &pound;1.2bn it made for the whole of 2008.<br /><br />Rivals have also enjoyed a lucrative start to 2009, with Barclays Capital&rsquo;s first quarter profits up 361 per cent to &pound;968m and Deutsche Bank&rsquo;s investment bankers moving &pound;54.8m into the black for the first quarter, after losing &pound;6.2bn last year.<br /><br />Henk Potts of Barclays Capital, said the industry was &ldquo;booming&rdquo;.<br /><br />&ldquo;Fixed income, commodities and currency are all doing fantastic volumes. Margins are very wide so there&rsquo;s a tremendous amount of opportunity,&rdquo; he said.<br /><br />Andrew Evans, managing director of recruiter Morgan McKinley, also pointed to a gradual increase in the number of loyalty awards.<br /><br />&ldquo;Retention bonuses have crept back into the recruitment vocabulary recently,&rdquo; he said.<br /><br />Signs of a bonus bonanza came as it emerged that Royal Bank of Scotland chief executive Stephen Hester will net up to &pound;9.6m for his efforts to revive the bank.<br /><br />UK Financial Investments (UKFI) -&ndash; which manages the government&rsquo;s 70 per cent stake in RBS &ndash; is understood to have met other shareholders to approve the deal last week.<br /><br />Hester will earn a basic salary of &pound;1.2m, around &pound;2m in annual non-cash bonus awards and nearly &pound;6.4m in share options.<br /><br />Hester&rsquo;s deal will depend on the bank&rsquo;s share price moving above 70p, a level at which the government would make &pound;8bn if it were to sell its stake.</div>