By Mary Mullaj
The recent turmoil in financial markets has let some to question the possibility of bonuses this upcoming holiday season. Chances are excellent that there will be bonuses on Wall Street this year, perhaps better than should be expected in such a chaotic time. However, it is estimated that there could be a 30 percent to 50 percent decline this year in bonuses, down from $3.2 billion last year. Although the numbers predicted might be down quite a bit, the number of employees being rewarded has also decreased, meaning that there are fewer people sharing the wealth. Additionally, firms are under pressure to pay bonuses to keep their prime employees from walking. However, since there are fewer competitors, there will not be much pressure to pay out bonuses to lower level employees, or anyone less than top traders. Even though banks are bound to be sensitive about their public images and might not want to be seen giving out hefty bundles of cash, they might consider paying rewards in deferred stock awards instead. Hedge fund employees will not be as lucky as those that work for banks, as hedge fund assets shrank by $210 billion overall in the third quarter.For bonuses, Lehman set aside $6.1 billion so far this year, Citi, $25.8 billion, JPMorgan $17.6 billion, Bank of America $14.3 billion, Goldman $11.4 billion, Merrill $11.2 billion, and Morgan Stanley $10.7 billion. Even Lehman brothers, bought by Barclay’s, has a $2.5 billion bonus pool that was kept separate from the bankruptcy filing. The pool works out to 250,000 per New York employee. (Keep in mind that last year the average for Wall Street was 180,000)
As Merrill Lynch merges with Bank of America, the job losses could equal 10,000 and New York’s Independent Budget office forecast a 20,000 job but earlier this year, which is probably a conservative figure. So when it comes to bonuses, lots of employees might consider themselves lucky just to still have a job.
Via Forbes
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