Bankers are the victims of their own inflated pay Add all this up, and Mr Hester is well on the way to £7.52m and his own place in the mind of the British public as an epitome of the fat cat banker and a symptom of all that is wrong with City pay. Of course, Mr Hester is far from exceptional. For a start his pay is benchmarked very closely to that of Lloyds Banking Group chief executive Antonio Horta-Osorio and Barclays boss Bob Diamond, who can each easily earn upwards of £5m every year. And what of bragging rights in a New York wine bar? On this basis Mr Hester is far from exceptional and somewhat below par for a Wall Street bank chief executive. Lloyd Blankfein, chief executive of Goldman Sachs, last year received a salary and bonus package worth $14.1m, while Jamie Dimon, boss of JP Morgan Chase, picked up nearly $21m. Neither does Mr Hester's pay look particularly out of line with his European peers. Frederic Oudea of Societe Generale earned €6.78m (£5.6m) last year and Baudoin Prot, chairman and former chief executive of BNP Paribas, received €5m for his work in 2010. However, compared to the world's largest bank by market value, China's ICBC, all the Western bankers can be considered massively overpaid. Dr Jiang Jianqing last year earned Rmb765,000, just under £80,000. This startling disparity reflects in part the massive increase in bank pay over the last two decades. In 1989, the chief executives of the seven largest banks in the US earned on average $2.8m, or about 100 times the median household income. Eighteen years later the average had soared to $26m - 500 times the median income. Andrew Haldane, an executive director of the Bank of England, is one of those who has drawn attention to this startling statistic and what it says about the banking industry. Like his fellow member of the Bank's Financial Policy Committee, Mr Haldane argues that the problem is the performance measure banks have used to calibrate their top executives pay. Using return on equity as their primary metric, which divides post-tax profits by total shareholder equity, chief executives were incentivised to chase short-term profits and ignore the longer-term risks they were taking to hit their targets. Mr Haldane points out that had banks from 1989 onwards applied a return on total assets metric to pay, the pay of the chief executives of the seven Wall Street banks in his sample would have risen to $3.4m by 2007, a figure equal to 68 median household incomes. It is not just the pay at the top of the tree that concerns regulators like Mr Haldane, but the entire cost structure of the industry. Even senior City figures have been amazed by the way the bonus culture has spread throughout the banking industry. Until the late 1980s, City bonuses were fractions rather than multiples of salaries, however Wall Street's compensation culture has taken root in financial centres across the world. By the late years of the last decade, pay in the Asian offshoots of the investment banking industry had more than caught up with London and New York. One recruiters' pay survey from 2008 shows that managing directors in complex credit structuring jobs based out in Asia were earning salaries worth £110,000 and bonuses of about £1.3m, compared to total pay packages in New York of less than £700,000. A survey published this week by recruiters Astbury Marsden showed that Hong Kong bankers expect bonuses for 2011 equivalent to nearly 40pc of their base salaries, compared to about a quarter in London. Even at these levels, City pay is still well above that in other industries. Astbury Marsden's survey shows that even relatively junior staff can be earning salaries of more than £100,000, while managers earning £250,000 are standard. Ironically, part of the reason for recent salary inflation was caused in part by Government moves to clampdown on bank pay. Financial Services Authority moves to limit guaranteed bonuses led most investment banks to increase base salaries. This led to competitive wage inflation as banks vied to hang on to staff. This move to a greater proportion of fixed pay has meant the fall in revenues over the last 18 months has exacerbated the need to cull staff to cut costs. In a very real way, many bankers have been the victims of their own inflated salaries, an irony many might like to consider as the City jobs cull continues.