Weak dollar = bonus anxiety
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Weak dollar = bonus anxiety
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SCOTT JAGOW: We’ve told you this week how bad the dollar’s doing. It now takes almost $2 to equal one British pound. Bad news if you wanna vacation in London, or if you’re a Wall Street type working over there. Hillary Wicai explains.
HILLARY WICAI: It could be considered a good problem to have: bonus anxiety syndrome.
U.S. banks like Goldman Sachs and Morgan Stanley are due to tell their staff if their bonus checks will be something to celebrate or a reason to put a resume in the mail in January, and the anxiety is high overseas.
The Financial Times’ David Wells says most American bankers living in places like London, for example, have bonuses calculated in dollars and then converted to the local currency at a pre-determined rate.
At the beginning of the year they pick whether they want the average exchange rate for the year or the rate when the markets closed at the end of the bank’s financial year.
DAVID WELLS: So you better be good at trading as well as banking in this sense because you need to have pre-determined vision as to what that rate was going to be.
Oooooh too bad for those that picked the end of the year rate.
The dollar hit a 14-year low against British sterling and a 20-month low against the euro today. That could shave 4% off the value of their bonuses.
But don’t work up too much sympathy for the bankers. The bonus pool could rise by as much as a third, fueled by a record year for mergers and acquisitions.
In Washington, I’m Hillary Wicai for Marketplace.
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