Big year will see bigger bonuses

NEW YORK - On Wall Street, they're counting the days until the securities firms hand out US$17.5 billion ($25.1 billion) or more in year-end bonuses. Car dealers, private jet operators and city officials are ready to share the windfall.

More than 150,000 New York bankers, brokers and traders are in line for payouts of two to 12 times their base salaries, says executive-search firm Options Group. Novice commodities traders may get an extra US$80,000 while some managing directors can expect US$3 million from companies including Morgan Stanley, Merrill Lynch and Goldman Sachs.

Manhattan car dealers, Long Island yacht brokers and boutique service providers such as air charter operators and butler agencies are already seeing anticipatory spending. The city itself is looking forward to the income and sales tax revenue. And then, there are the parties.

"There's someone on Wall Street that's taking 20 of his closest buddies for his bachelor party, renting a yacht, cruising in the Caribbean and ending up in Sandy Lane in Barbados on the golf course," says Tatiana Byron, president of New York event planner 4PM Events. The cost: at least US$200,000.

Financial professionals, New York's best-paid workers, are benefiting from one of their employers' biggest years ever. Wall Street's total US pretax profit is likely to rise 2.4 per cent to US$21.2 billion in 2005, says the Securities Industry Association. That will make it the fourth-best year for profits; the biggest was 2000, followed by 1999 and 2003.

Low interest rates, volatile commodity prices and rising stock markets have fuelled a trading and investment-banking boom for the firms.

The five largest independent New York-based firms may post combined net income of US$18.7 billion this year, up 8.9 per cent from their all-time high in 2004.

Federal, state and local tax collectors will have first dibs on the bonus payments. New York City budget officials count on the tax revenue from securities firm employees, who make up 4.5 per cent of jobs in the five boroughs and 19 per cent of pay. "Wall Street has a huge impact on the city's economy and the budget," says Marcia Van Wagner, New York City's deputy comptroller for budget.

Last year, the city balanced its budget partly by using taxes generated by US$15.9 billion in Wall Street bonuses. The bonuses paid out in January will help with a projected US$4.5 billion budget gap for fiscal 2007.

High rollers

* Financial professionals are New York's best-paid workers.

* They are set to benefit from one of their employers' biggest years.

* Wall Street's pretax profit is likely to rise 2.4 per cent to US$21.2 billion in 2005.

* That will make it the fourth-best year after 2000, 1999 and 2003.

- BLOOMBERG