NEW YORK – The credit freeze already affecting leveraged buyouts, mergers and computer-driven trading strategies may also drive Wall Street bonuses to their first decline in five years, Bloomberg News said.
Barring a turnaround by the end of the year, Options Group estimates bonuses may fall as much as 40 percent. Hardest hit would be those who create and sell securities backed by mortgages or pools of debt. Last year, the average bonus at Wall Street’s five biggest firms rose 18 percent, Bloomberg data show. This year, analysts estimate the top four firms will see earnings rise at least 11 percent, while No. 5 Bear Stearns will see a decline of about 6 percent.
Hedge-fund traders with at least 10 years’ experience – made an average of $580,000 last year – will probably see an increase this year of 8 to 9 percent, Adam Zoia, founder of New York-based Glocap Search LLC and co-editor-in-chief of the Hedge Fund Compensation Report, told Bloomberg News. That’s about half the increase Zoia was predicting before the market decline.
At prime brokerages last year, bonuses surged 20 percent to 25 percent, according to Options Group. This year, Karp said, they were expected to rise 5 percent to 10 percent, said CEO Michael Karp. But, he added, “This is the quarter that is going to determine whether compensation is going to be lower or not.”
