Mega-bonus returns as banks return to profit

Bankers' bonuses will be back under focus this week as Goldman Sachs, Citigroup, JP Morgan and Bank of America Merrill Lynch are all set to report a sharp recovery in third-quarter earnings.

Investment bank fees have recovered strongly from the lows they hit this time last year and even though there are fewer deals being done, income from selling bonds and underwriting share issues is booming.

Goldman Sachs is expected to pay as much as $22 million (£13.7 million) in bonuses to its 30,000 employees this year. Some 5,500 of them work in London. The bank is forecast to report third quarter profits of $3.5 billion on Thursday.

But JP Morgan and Bank of America which report on Wednesday and Friday are both likely to show rising bad loan provisions on their core banking business as the US economy staggers out of recession.

Bank of America is likely to show a strong performance from Merrill Lynch which it bought for $19 million at the height of the financial crisis.