City heads for new bonus bonanza

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The Independent Online
Top City staff are expecting bumper bonuses this year after a busy 12 months in the corporate finance arena and a steady climb in the equity markets. Many will be hoping to double their salaries in what looks like being another lucrative year for mergers and acquisitions work.

Among those expected to reap the highest rewards are corporate financiers who have burnt the midnight oil, putting together deals that have included the takeovers of Forte, MAI and Trafalgar House. And those dealers who use their firms' money to bet on the markets - known as proprietary traders - are also expected to have had a good year.

September is the time the directors of the top City firms sit down and work on the budgets for the following year. It is also the time many of them start to pencil in the bonuses with which they will reward crucial staff.

Judging from the profits many investment banks turned in for the first half of the year, the prospects for bonuses look good. Analysts have upped their forecasts for the final half of the year and agree that City dealers should be well rewarded, although probably not as well as in 1993 - the year more than 100 employees at US investment bank Goldman Sachs were made dollar millionaires by their bonuses.

"In corporate finance and M&A it's very much a story of strong bonuses of over 100 percent of salary," one of the top headhunters in the City said.

Such executives are already earning basic salaries of around pounds 75,000. Some of the stars, at US firms such as Merrill Lynch, will be taking home six-figure salaries, even before their bonuses are paid.

Mergers and acquisition work remains one of the driving forces in the UK economy as industries continue to consolidate and the City continues to rake in fees for organising the deals. Lazard Brothers alone advised on four public bids with a combined value of almost pounds 6bn in the first six months, guaranteeing a highly profitable year.

The steady rise of the FT-SE should have made it easy for the wheelers and dealers on firms' proprietary dealing desks to make money.

"On the equity side the market has done phenomenally well and will be good news for traders who bought at the start of the year and sat on their positions," said one senior market source.