THE American investment bank JP Morgan is to trigger one of the City’s biggest pay days by buying out the remaining 50% of Cazenove, the blue-blooded broker, for £950m.

About £650m will be split between 80 former Cazenove partners, including a number of aristocrats and society figures, many of whom are retired.

The scale of the payouts is expected to fuel the controversy over City remuneration, adding to calls for more stringent curbs on bankers’ pay in the wake of the credit crisis. It will also signal the end of an era in British financial services.

Cazenove, the Queen’s stockbroker and adviser to some of Britain’s biggest companies, was founded as a partnership more than 180 years ago and came to exemplify the old-school style of City firm.

Shares in the business were passed on when partners retired. But when it became a company in 2001 — a response to the “big bang” deregulation that swept away many old City firms — ownership was transferred direct to the individuals. For them it has proved a lucrative investment, thanks to a deal five years ago with JP Morgan.

They set up JP Morgan Cazenove, which has become a deals powerhouse in recent years, and now the American bank is buying out the 50% of Cazenove it does not own.

David Mayhew, the firm’s 69-year-old chairman, is expected to make up to £20m from the sale, based on the last published figures. Mayhew, who has the ear of the country’s leading chairmen and chief executives, is keen to have a continued role at the firm and wants to head its European operations.

Former Cazenove luminaries including Henry Henderson, Julian Cazalet, John Paynter, Christopher Smith and David Wentworth-Stanley are all expected to receive about £15m, based on recent company documents.

Robert Pickering, who quit as chief executive a year ago, is believed to be in line for about £18m. Bernard Cazenove, the last member of the family to hold a senior role in the firm and who retired in 2004, is expected to receive £12m-£14m.

Although rivals initially said the transatlantic marriage would never work, JP Morgan Cazenove is believed to be on track to post record profits this year of about £500m — almost three times last year’s total.

It has advised on almost all the large rights issues in the London market this year, including huge fundraisings by HSBC, Rio Tinto and now Lloyds Banking Group.

The deal will put a price of between 550p and 600p on each Cazenove share and will mark the last and biggest payout over the five-year period. In addition to this, the 80 Cazenove partners have received dividends worth about 19p a share each year, as well as 200p a share from its asset-management business and an initial payment of 150p a share made at the time the joint venture was agreed.

Most of the biggest payouts will go to bankers who were Cazenove partners before the creation of the joint venture, including many who now work for rival City firms. At least half of the group of 80 have retired.

Although there have been regular internal auctions to allow staff to trade their holdings in the firm, it is understood that the overwhelming majority of the former partners retain large holdings.

The last quoted price for the shares in the internal market was roughly half the take-out price now being offered by JP Morgan for the remaining shares.

Mayhew is known to have sold shares on a number of occasions in recent years, although he retained 3.6m shares and a further 400,000 shares tied up in deferred bonuses in December 2008.

Even bankers recruited since the venture was set up will share in the payout, thanks to a pot of shares that was set aside for bonuses.

The final size of that payout has still to be agreed. But, according to one Cazenove partner, Naguib Kheraj, the former Barclays finance director who joined the firm as chief executive only a year ago, and Ian Hannam, one of the star bankers who joined from JP Morgan, are in line for big payouts. Alan Carruthers, the bank’s head of equities, could receive at least £6m, based on figures in last year’s annual report.

A handful of City institutions that pumped equity into Cazenove after it was forced to scrap plans for a flotation in 2001 will share about £100m. Standard Life, Aviva, Prudential and Witan are among the investors, along with Caledonia Investments and Fleming Family Partners.

At least 15 Cazenove individuals will receive £10m each. They include Edward Harley, Arthur Drysdale, David Croft and John Reilly as well as Anne West, the firm’s first female partner. Others such as Lord Killearn will receive £9m. Viscount Garmoyle and Tim Wise will get about £8m each.

Times Recommends

• Minister in talks with Saudis to protect creditors
• Premier Inn hits back in £29-a-room row
• Bankers hit back at 'populist' bonus supertax