Million-dollar bonuses back on Wall St

Are bull times back? Million dollar bonuses for Wall St traders are being offered again.

Wall St firms are again recruiting commodities traders with promises of US$1 million ($1.4 million) bonuses as prices of raw materials double.

Less than a year after oil tumbled a record 54 per cent and the Reuters/Jefferies CRB Index was suffering its biggest drop on record, Bank of America plans to boost commodity headcount by 25 per cent.

London-based Barclays will increase staff about 6 per cent. Morgan Stanley is recruiting traders in shipping.

The banks declined to comment on compensation.

"You are definitely seeing US$1 million or more guaranteed bonuses coming back for 2009," said George Stein, managing director at New York recruitment firm Commodity Talent. "These bonuses would be for new hires who are 'movers and shakers', those who can double the size of business within a short period of time."

Banks are recruiting after oil increased 99 per cent and copper rallied 98 per cent since February.

Assets in commodity mutual funds, indexes and exchange-traded products rose about 19 per cent to US$209 billion in the second quarter, according to Barclays Capital.

The hiring also comes after financial companies cut more than 328,800 jobs after credit markets collapsed two years ago.

Goldman Sachs Group reported a record US$6.8 billion in revenue from fixed income, currency and commodities trading in the second quarter. Royal Bank of Scotland Group said first-half commodities income rose 34 per cent to $467 million ($1.1 billion).

"The business is picking up and banks had trimmed so much they are making emergency hires," said Jason Kennedy, chief executive of London-based Kennedy Associates.

Kennedy said he moved at least 10 people in the past two months with guaranteed bonuses of US$1 million.

Compensation is coming under greater scrutiny after the world's biggest financial companies racked up almost US$1.6 trillion of losses and writedowns.

Citigroup, Bank of America, and Wells Fargo were among the biggest recipients of US$385 billion of government funds.

Citigroup is said to be considering ceding control of its Phibro energy-trading unit because a potential US$100 million payday for the unit's chief, Andrew Hall, is raising concern among lawmakers and regulators. Hall offered to modify his compensation contract in order to avoid confrontation with the US government, the Wall Street Journal reported. The bank advised the Treasury that Hall and another trader are exempt from federal review, the New York Times said.

JPMorgan, Citigroup, Morgan Stanley and Zurich-based UBS AG are among banks said to have increased salaries amid restrictions on bonuses.

"If you want to be top-five Wall St commodity banks, you can't ignore your competitors' ability to poach your talent," Commodity Talent's Stein said.

- BLOOMBERG