Wall Streeters haven't lost their taste for luxury - Business - U.S. business
NEW YORK - Wall Street <http://www.msnbc.msn.com/id/40843582/ns/business-us_business/> 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 mergers 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, 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, 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. 'Relatively in control' Many on Wall Street are wary of flaunting their spending plans because of lingering public resentment over soaring compensation to bank executives even as the U.S. government paid to bail out financial institutions in crisis. "People are trying to keep it relatively in control," one investment banker told Reuters. Another said his firm's Christmas party was at a bar where finger food was served. These and other bankers contacted by Reuters would not be quoted by name. One investment banker said he saw no need for splurging. "After living through two years of stressful times, my wife and I will do a couple of modest things," the banker said, noting that his one indulgence was a Caribbean cruise that ended up being canceled by this week's snowstorm in New York. Upscale store chains like Saks Inc,, Neiman Marcus and Tiffany & Co have reported some of strongest sales gains among retailers in 2010. But employees at Saks Fifth Avenue and Tiffany in Manhattan told Reuters they haven't seen any sign of more spending in anticipation of banker bonuses. Bill Morell, the general manager of Foreign Cars Italia, a Ferrari, Aston Martin and Maserati dealer in Charlotte, North Carolina, home of Bank of America, said he's been getting more inquiries from bank employees to purchase in February when their bonus checks come in. But he also noted that interest in used high-end sports cars has been particularly strong. One apparent change is that bankers with the means to fork out millions on homes and modern art are more discriminating than just a few years ago. 'They never really left' Wall Street types used to go to fairs like Art Basel Miami Beach and buy a paintings as a souvenir, but they now approach art buying as an investment. "Now they're doing a lot of research and they're buying smarter," said Adam Sheffer, a partner at Cheim & Read, an art gallery in New York's Chelsea district. Sheffer said the gallery earlier this month sold a $4 million painting by Joan Mitchell to a hedge fund <http://www.msnbc.msn.com/id/40843582/ns/business-us_business/> manager. Their splurging also extends to apartment hunting. Halstead Property's executive director of sales, Richard Grossman, said Wall Street executives this year started making inquiries about Manhattan apartments earlier. Many high end places going for between $3 million and $7 million are in contract lately. "Some of these guys are in their 20's and 30's and getting very big bonuses," Grossman said. Luxury department store chain Neiman Marcus has also had no problem unloading some of its more curious and pricey Christmas gifts. The company said it took only three minutes to sell all 100 of its limited edition Chevrolet <http://www.msnbc.msn.com/id/40843582/ns/business-us_business/> Camaros, priced at $75,000 each, when they were offered in October. And the Mercedes-Benz dealership in Manhattan expects 2010 to be its best year ever. "They never really left," said general manager Blair Creed of his Wall Street clients. Copyright 2010 Thomson Reuters. Click for restrictions.
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