Wall St bonuses to separate haves and have-lots

By Joseph A. Giannone

NEW YORK (Reuters) - Wall Street bonuses, on average, will be little changed this year, but not since 1998 will the gap between the haves and have-lots be so great.

The collapse in mortgage markets and the broader credit crunch this year triggered about $50 billion in losses and thousands of job cuts at investment banks in hard-hit fixed income businesses. Concern about deeper losses and a slowdown in deal activity has hammered bank stocks.

Yet year-end bonuses, which make up the vast bulk of annual pay for bankers and traders, overall will be flat compared with record 2006 payouts, recruiters and headhunters say. Beneath the surface, though, individuals will see everything from increased payouts to pink slips.

"There's going to be a tremendous variance in terms of pay this year," said Eric Moskowitz, a compensation consultant at Options Group. "The only other year that compares is 1998."

That year, global bond market turmoil slashed fixed income profit, even as banking and equities businesses thrived.

Lost in all the recent noise about job cuts, write-downs and ousted chief executives is that Wall Street will generate record revenue this year -- an estimated $132 billion among the top 5 banks -- powered by a first-half frenzy in mergers and acquisitions, equities trading, stock offerings and money management.

The most successful advisers, equity traders, commodities and derivatives dealers will rake in bonuses that are 10 to 20 percent higher this year, according to Wall Street recruiters.

Average bonuses for managing directors in investment banking, using one example, will range from $2 million to $2.5 million, up 10 percent from last year, the recruiters said.