Even before the champagne corks started to pop on New Year's Eve, the grapevine in London and New York was suggesting that some investment banks were seeking new dancing partners and sending each other flowers. Thanks to a much better than expected fourth quarter, most bankers were smiling. The early indications are that chief executives will be paying themselves record amounts of money in cash, stock and options.

But what about those merger rumours? Just before Christmas, I made only my second visit of the year to Canary Wharf to have lunch with Jeremy Isaacs, the chief executive of Lehman Brothers International. Lehman has had a scorching year and Jeremy, who is still absurdly young, has a razor-sharp intellect and a wonderful sense of humour. Lunch was great fun and you can sense the new confidence and esprit de corps at Lehman when you are escorted past the milling employees and upstairs to the executive dining rooms, which are the size of a small London apartment. Every permanent Lehman employee owns shares in the company and it shows.