Updated from Thursday, Dec. 18

The estimated 4,600 employees from Wachovia's ( WB) investment banking division will see bonuses cut at least 90% this year, according to a manager in the unit.

Wachovia investment banking unit employees were told last week their bonuses would drop by 90%, according to the manager. Rolfe "Rik" Kopelan, managing partner with executive recruiting firm Capstone Partnership, says "sources " at Wachovia, who he declined to name, told him on Thursday pay has now been revised even further downward to between 3% and 5% of last year ahead of its planned merger with Wells Fargo ( WFC).

" Wells Fargo Chairman Dick Kovacevich has said he wants to bring rationality to investment banking pay, but this isn't rational. What does it say about an institution?" Kopelan says . He believes virtually the entire investment banking unit will leave at the first opportunity.

The numbers appear to conflict with what Wachovia has said publicly about compensation for its investment bankers. A Wachovia spokeswoman sent over a statement that read "management has decided that discretionary incentive plans for 2008 will pay an average of 20% of incentive targets, with differentiation based on performance." Wachovia spokeswoman Christy Phillips Brown declined to elaborate on the statement.

Wells Fargo shareholders will vote on the bank's purchase of Wachovia on Tuesday.

The reduced compensation at Wachovia comes as most top Wall Street banks are doing the same. The top seven executives at Goldman have all said they will forgo 2008 bonuses, which led top executives at Morgan Stanley, Merrill Lynch and other firms to do the same.

Goldman's overall compensation expenses for fiscal 2008 were $10.93 billion, cut nearly in half from what it paid out the previous year, the firm said in its fiscal fourth-quarter financial report Tuesday. Morgan Stanley, which canceled its holiday party this year, is cutting its bonus pool by 50%, according to the Financial Times. The firm, which reported earnings on Wednesday, says "beyond sayings from significantly lower compensation in 2008, the firm has targeted $2 billion in annual cost savings."

Also, in an unusual move announced Thursday, Credit Suisse ( CS) executives will see part of their compensation linked to the performance of certain illiquid, distressed assets.

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