Bank of America is planning to defer bonus payments to employees in its capital markets and investment banking units this year, according to several executives familiar with the situation.
The restrictive new policy will affect bonus payments of $50,000 or more and is expected to be announced on Thursday, when BofA informs employees of their 2008 bonuses.
A BofA spokesman said he he was not aware of any change in bonus payment plans.
BofA employees, who would normally receive their 2008 bonuses in February, will now have to wait until February 2010 before getting one-third of their 2008 bonuses. The remaining two-thirds would be paid out in 2011 and 2012.
The new policy contrasts with the accelerated bonus payments at Merrill Lynch, which paid out $4bn in year-end bonuses – mostly in cash – to its own people on December 29, just days before it was acquired by BofA.
Word of the forced deferrals has sparked anger at BofA’s capital markets operations in New York and London.
BofA staffers are seething at the disparity between their bonuses and those at Merrill Lynch, a feeling which does not bode well for attempts to merge the two groups into one seamless operation.
Moreover, having constructed a lifestyle around the near-certainty that there would be some kind of bonus each February, some BofA executives will have trouble making ends meet this year, which could lead to departures above and beyond the 3,000 or so cuts that are expected in the unit this quarter, insiders said.
“This is going to cause an uproar,” says one BofA executive familiar with the matter. “There will be cash flow issues for families.”
Copyright The Financial Times Limited 2009
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