Bonus crunch for bank giants as job switches 'still on cards'

Tomorrow is a crucial day in the annual bonus round as bankers at powerhouses JPMorgan and Citigroup learn the size of their rewards.

The City will be keenly watching as business website eFinancialCareers today claims that a majority of bankers would consider changing jobs if they are unhappy with their bonuses.

A survey of 1874 City professionals found that 52% said they could quit over their bonus even though many banks are axeing jobs because of the credit crunch.

A quarter of City workers admitted they would "rage inwardly and carry on regardless", said the poll, carried out before yesterday's stockmarket turmoil.

Meanwhile, research from Heartwood Wealth Management says 30% of City workers expect to receive a smaller bonus than last year while 70% anticipate their bonus will be the same or bigger. Despite that optimism, only 29% plan to spend their entire bonus compared with 46% last year, suggesting many expect hard times ahead.

Staff at JPMorgan, which has appointed Tony Blair as a £2.5 million-a-year adviser, are expected to collect big bonuses because they avoided the worst of the credit crunch. Insiders say asset management, private equity and commercial banking performed strongly. JPMorgan posted record net income of £7.5 billion for 2007.

Rewards at Citigroup are likely to be hit after £12 billion of credit-crunch write-offs. Wealth management is one of the few divisions tipped to escape the gloom.

Subprime has had a major impact on bonuses. While Goldman Sachs posted record profits and paid out £9.4 billion to staff, rivals such as UBS and Dresdner Kleinwort are capping some bonuses in cash and paying the rest in shares. Morgan Stanley, with a £5.2 billion writedown, still managed to increase its bonus pot to £8.2 billion.

As well as reducing bonuses, banks have been increasingly paying bonuses in shares and options rather than cash. That way, the money does not come out of already-diminished profits, and staff are encouraged not to quit.

However, US banks are also looking at ways of paying staff for the longer-term performance of the products they develop and sell. US politicians have complained that fixed-income traders made big bonuses in previous years for creating and dealing in subprime-related products that have since proved worthless.