Return of the million-dollar banker . . . and his sidekick, the new-look yuppie

Peter Rippin can't believe his luck. Sales at the City cigar merchant Walter Thurgood's, where he works, have always been buoyant. But this year's business, up at least 10 per cent on the same period last year, has been exceptional.

In part the sales boom is the result of a new cigar-smoking fad, imported from the United States. But as Mr Rippin readily admits, the new fashion he caters for would find it much more difficult to become established if his customers did not have the money to pay for their odoriferous purchases.

"I've just served a City gent who came in and bought three boxes of my Cuban cigars for pounds 600. It does seem as there are a lot more people around with money to burn," he said yesterday. "Oops, I've got to go, the shop is full of customers."

The influx of new customers into Walter Thurgood's reflects a dramatic upturn in salaries paid to thousands of workers in the City, leading some observers to claim that wages in the Square Mile are in danger of equalling the high-point reached in the late 1980s.

Then, the sight of champagne-swilling yuppie traders, gorging themselves in expensive restaurants appeared to epitomise the decade's preoccupation for making money fast - and spending it just as easily.

Today, however, the picture is different. Most investment bankers will admit that a few among them are back to earning massive salaries. But, they claim, the high rewards are not as evenly spread among all employees. High pay is much more highly focused on the "big hitters", those capable by their specific skills of adding tens of millions of pounds to their employers' bottom line.

Gone are the days of Porsches and high living: "Those who are earning big bucks are those who have something to offer," one investment banker said yesterday. "They are not interested in all the ostentation that went on before, although if they see something they like, they will pay to have it."

The root of the present pay spiral has been the determined poaching of several top investment banks of key teams they hope will help them to become key players in the global banking markets now developing.

Many banks, faced with a decline in real profits from retail banking - ordinary mortals' accounts - have decided that the answer lies in positioning themselves in the world investment banking arena. Here, the ability to direct flows of billions of pounds out of one part of the world, such as the Far East, and into other emerging economic markets, including Latin America, becomes critical.

It is this perceived ability that led to the poaching earlier this month of more than 50 Latin America staff by Deutsche Morgan Grenfell from its Dutch-owned rival ING Barings.

Another area which increasingly commands high salaries is corporate finance. Helping companies to float on the stock market, to mount bids for their rivals, or to fight them off is big business. Last year, about pounds 69bn of takeover deals were carried out in London, up from pounds 25bn in 1994. The 1994 total is about to be breached this year.

"You have to remember that a lot of this work is very much based on personalities, on who you know and how well you get on with them," one source said yesterday. "Anyone with a skill in that area, and the team working for them can virtually demand what they want."

Despite the boom for some, others are not getting it so easy. One senior Japanese investment bank executive said: "In fact, salaries are getting more unequal, like the wider economy. About 9 out of 10 dealing floors are shaking out staff.

"If you are in the right place at the right time you can win the Lottery. But for most, the rewards are far more modest."