London's City bonuses to drop 16pc
London, October 8, 2007
The global credit crisis will chop 16 percent off this year's bonus payouts in the City of London financial district, according to a report published on Monday.
London bankers and traders are expected to receive bonuses worth 7.4 billion pounds ($15.06 billion), second only to last year's record 8.8 billion pounds, Britain's Centre for Economics and Business Research (CEBR) said.
A sharp rise in defaults this year in the U.S. subprime mortgage market -- which caters to borrowers with poor credit histories -- caused upheaval in financial markets and deeply dented revenues of some of the world's biggest banks.
"Given their highly incentivised schemes, investment banks and hedge funds will lead the cuts, with payouts in traditional areas such as securities remaining largely unscathed," CEBR said.
Robert Thesiger, chief operating officer of London-based recruitment firm Imprint Plc, said last week that he expected City bonuses to fall at least 10 percent.
"The credit crunch will be used as a way of managing the level of expectations of bonuses," he said. "Bonuses are a really good opportunity for organisations to have a bit of a spring clean."
The CEBR forecast a further 16 percent decline in 2008 City bonuses because of an expected slowdown in activity in China after the Summer Olympics and weaker economic growth in Britain.
In the last bonus season, about 4,200 City bankers pocketed payouts of more than 1 million pounds ($2 million) each, according to a CEBR estimate.-Reuters