At an upscale midtown restaurant a few weeks ago, a bond trader from a bulge-bracket Wall Street firm groaned about a catalog he received from jeweler Harry Winston. "The saleslady knows my wife is expecting something huge this year," he said.
Well, it may be time for him to consider upsizing the diamond.
According to New York City comptroller Alan Hevesi, the total amount of Wall Street bonuses this year have reached a record high of $21.5 billion, surpassing the previous pinnacle of $19.5 billion in 2000. The payout represents a 15.5% increase from 2004, and translates into an average bonus of $125,000.
"The securities industry had a very good year during 2005. The industry paid record bonuses on exceptional revenue growth and solid profits," Hevesi said in the release.
Wall Street firms, including
, are generating record profits this year, with most of the positive momentum coming in the third and fourth quarters.
Fees generated from equity capital markets deals, investment banks' most profitable transaction in terms of fee percentage, grew 5.2% in 2005. According to Thomson Financial, the banks brought in $32.2 billion in underwriting fees last year.
Credit Suisse First Boston
ranked first globally among the book runners in IPO transactions, and
led the charge in total fee generation.
Merger and acquisition activity, which also generates huge fees for banks, hit its highest level since 2000, with imputed fees over $31 billion worldwide. Goldman Sachs ranks at the top of that list, according to Thomson Financial.
Wall Street's workhorses aren't the only ones taking home billions. The banks' success also means a large payday for Uncle Sam. New York City expects to take in $500 million in tax revenue, while the state will collect $1.5 billion.
"Wall Street continues to be critically important to the economies of both the city and the State," Hevesi said in the release.