Bank chiefs in line for $10m bonuses

A "bumper year" for mergers and acquisitions will deliver multimillion-pound bonuses to star performers in the City, an annual report on pay in investment banking showed today.

Heads of the leading European banks are in line for payouts of between $8m and $10m (£4.2m and £5.3m), while heads of country divisions will earn in excess of £2.6m.

The report, from the executive headhunters Armstrong International, said the mood was "buoyant" across most sector and product areas. Along with record-breaking M&A activity, a rebound in equity markets and continued strength in debt markets had also led to an uptick in the expected rewards in the new year.

It is the latest report to predict a windfall for workers in the financial industry, and particularly in the City of London and Canary Wharf, when the major banks pay their annual bonuses in the early months of 2007. However, it said that while key performers were likely to see their bonus package as much as 30 per cent higher than last year, under-performers were set for disappointment.

Top commodities traders could look forward to an increase in their bonus of between 15 and 27 per cent while top performers in derivatives are looking at an increase of 30 to 60 per cent.

"The trend in 2006 will continue to see outperforming bankers in key areas receive the lion's share of the bonus pool," said Matthew Osborne, a partner at Armstrong. "Whilst the overall bonus pool is likely to be up, this is by no means a guarantee that everyone will benefit equally."

Its report of the main sectors showed that corporate finance looked set to reap the highest rewards after an "exceptionally strong year" for M&A.