Bonuses for City investment bankers and traders are set to be slashed by more than 60% across the board, the biggest decline in year-end compensation for a decade. Only the banks’ top performers, who account for less than 5% of the total headcount, will take home bonuses at or close to last year’s level. The level below that, including managing directors, could see compensation collapse by as much as 80%, according to Armstrong International, the executive search company. The banks’ dilemma will centre around how to pay employees enough to ensure they do not leave without incurring public wrath or government intervention. Armstrong’s 2008 survey shows that top forex traders can expect bonuses of as much as 60-70% of their 2007 figures, but many mid to low-level traders are likely to receive no bonus at all. M&A bankers are also set for disappointing year-end packages. Although billions of dollars worth of deals were struck in the first half, the global volume of deals has fallen by more than 25% as companies struggle to finance their bids.
