Historic crisis – but bankers expect rising bonuses

The onset of what has been described by the Bank of England governor Sir Mervyn King as "the most serious financial crisis" in history has failed to dent expectations for bonuses in the City. Nine out of 10 finance professionals expect to receive an annual handout again this year.

The downturn in banking that has forced Deutsche Bank to issue a profit warning and other banks to alter their business plans is expected to be underlined by US firms in the coming days, when JP Morgan and Goldman Sachs report results for the third quarter.

Goldman may report only its second quarterly loss since it ended its partnership structure a decade ago, according to some analysts. The CBI's barometer of confidence among financial firms showed this month that sentiment had worsened for the first time since March 2009.

Even so, expectations for bonuses remain among the staff surveyed by City jobs group eFinancialCareers.

James Bennett, a managing director of the group, said: "External observers may be shocked by the confidence being expressed by bankers ahead of the bonus season. However, the pay-for-performance culture is very much ingrained in the financial psyche, and even in times of market turmoil, financial institutions need to take care of their best talent in order to retain them."

Anger over how bonuses can continue to be paid when banks have made losses has overshadowed the banking industry since the 2008 crisis, when banks such as the Royal Bank of Scotland, which had to be rescued from collapse by the taxpayer, still paid out bonuses – albeit no longer in cash.

As the Bank of England announced plans to pump another £75bn into the financial markets last week, King warned: "There is not enough money. That may seem unfamiliar to people. But that's because this is the most serious financial crisis at least since the 1930s, if not ever."

The eFinancialCareers survey said that of the 89% of the finance professionals it questioned who were expecting bonuses, nearly half were anticipating bonuses higher than last year. Just three out of 10 expected a decrease, while a quarter thought they were in line for the same amount as last year.

They cited "personal performance" as the most likely reason for their bonus expectations, followed by a change of employment or the performance of their company.

The company said: "The bullish expectations hide a downward trend compared to last year's survey. At that time, among those who expected a bonus 62% were expecting an increase on the previous year, and only 12% expected a decrease."