Chunks Crying All the Way to the Bank

Dec. 7 (Bloomberg) Investment bankers in Europe may lose a chunk of this year's record bonuses because the dollar's drop against European currencies will erode payouts that can account for as much as 90 percent of annual compensation.

"All big U.S. houses usually pay bonuses in dollars, and if you're in the U.K. or Europe it means you'll be hit quite badly at the moment," said James Heath, a London-based headhunter at Greenwich Partners, a financial-recruitment company.

Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Bear Stearns Cos. plan to pay a record $36 billion in bonuses this year, according to company reports and analyst estimates. European staff who didn't link their bonuses to this year's average exchange rates have to contend with the dollar's 11 percent decline against the euro and 13 percent slide against the pound.

Managing directors who advise on mergers and acquisitions will get bonuses of $2.3 million on average, according to London- based recruiters at Global Sage Ltd. The dollar's decline against the pound may reduce the payments by as much as $300,000, or 153,000 pounds.

Even with the weak dollar, bonuses are "so large that they will still get a very significant amount," said Jonathan Said, senior economist at London-based Centre for Economics and Business Research Ltd. The payments will be up as much as 30 percent this year, according to a survey published Nov. 15 by London recruitment firm Armstrong International.