City defends high bonus expectations

WALL Street banks are on track to pay employees a record $140bn (&pound;88bn) this year, and despite predictions of a public backlash,City figures say that bonuses are well-deserved.<br /><br />Bankers&rsquo; bonuses look set for a resurgence, after US bank JP Morgan Chase smashed analyst expectations to report third-quarter earnings of $3.59bn (&pound;2.5bn), a 72 per cent year-on-year rise. It said it had put aside $7.3bn in the period to pay staff. <br /><br />The bank is on track to pay out $29bn for the year, with investment bankers &ndash; many in the UK &ndash; set to receive around &pound;280,000 each.<br /><br />With JP Morgan&rsquo;s US and European peers set to report over the next few weeks, Liberal Democrat MP Vince Cable predicted public &ldquo;revulsion&rdquo; at the size of bonuses, while Labour MP John Spellar said there would be &ldquo;outrage&rdquo;. But City figures defended the bonuses, saying they were within the rules and necessary to keep London internationally competitive.<br /><br />&ldquo;While some may be critical of the fact that the industry is looking so much better, that banks are in profit again is a good thing for the UK economy,&rdquo; said British Bankers Association chief executive Angela Knight. <br /><br />&ldquo;And the bonuses are linked with the new bonus agreement, including deferrals, so people do not get the money if they do not perform.&rdquo;<br /><br />Andrew Evans, managing director of recruiter Morgan McKinley&rsquo;s financial services unit, said that bonuses are essential to attract and retain &ldquo;the highest calibre of talent&rdquo;.<br /><br />He added: &ldquo;By no means do optimistic bonus expectations suggest the City is back to pre-credit crunch levels, but they do suggest the situation is improving.&rdquo;<br />