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Bonus Watch: Merrill Cuts Fixed Income Bonus By 40%

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It seems that the forty-percent bonus wipe-out we reported this morning is fast becoming the industry standard, at least for certain fixed-income groups. Merrill Lynch, which reported a $2.24 billion third-quarter loss and was forced to seek help from outsider investors, has given out orders to fixed-income managers to cut 2007 bonuses by an average of 40 percent, according to a Bloomberg report that hit today.
Of course, the bonus wipeouts won’t hit across the fixed income world equally. This morning’s report about the structured products group at JP Morgan showed a total 40% cut despite the fact that the group is not directly involved in mortgages. At Merrill bonus payments may drop by 80 percent for traders specializing in mortgage bonds and collateralized debt obligations, according to Bloomberg. Other groups, however, will not be immune. “Bonuses may drop 20 percent for interest-rate traders and 60 percent in the New York-based firm's corporate bond unit,” the people who gave Bloomberg this information said.
Merrill Lynch to Cut Fixed-Income Bonuses, People Say [Bloomberg]