The other side of bank bonuses: smaller donations, fewer sales

Charlotte ObserverFebruary 9, 2010 

CHARLOTTE, N.C. — Bank bonuses are bouncing back, at least to some extent.

To be sure, they're not climbing to the heady levels of three or four years ago. And for many bankers, a bigger portion of their bonus pay will be tied to company stock and isn't immediately spendable, a nod to populist anger about perceived fat cats on Wall Street. Still, there is some cause for celebration inside the Charlotte towers of Bank of America and Wells Fargo.

At Bank of America, employees have been learning this month about their bonus pay for 2009 and are set to receive the money starting Monday. In general, the bonuses are expected to be better than last year's payouts, which were down by 60 percent or more from the previous year.

Employees at Wells Fargo won't get their bonuses until next month, but the bank says that its total pool for bonus and commission pay is up about 66 percent over last year.

While politically sensitive nowadays, the payouts are a critical part of personal income - and consumer spending - in Charlotte, where the two banks have about 34,000 employees. In Mecklenburg County wages earned by financial workers fell by about $650 million, or one-third, in the first quarter of 2009 from the prior year, a dramatic example of the impact of diminished bonuses.

Observers are carefully watching how Wells Fargo handles the payments this year. This will be the first time Wells has been solely in control of bonuses for Wachovia's former investment banking and capital markets businesses, which have about 1,000 employees in Charlotte. Before former Wachovia CEO Bob Steel departed at the end of 2008, the bank had already decided to pay only about 20 percent of bonus targets.

As one local banker put it: "It's the $64,000 question as it relates to Charlotte."

In Charlotte, the nation's No.2 bank town, the bonuses help drive the city, funding charitable giving, the real estate market, retail and other aspects of the economy.

At Lions Jewelers in Phillips Place, a high-end shop that has benefited in past years from bonus season, manager Tonda Rifkin is glad that sales are up compared to the past two years, but she isn't sure if it's related to anticipated bank bonuses.

"You used to hear clients mention that they had received or were getting a bonus, and you just don't hear the bonus talk any more," Rifkin said. "Maybe they are getting a bonus and they're just not talking about it as much."

At Foreign Cars Italia of Charlotte, where cars run from about $100,000 to $1 million or more, bank bonus season used to provide a boost every February. But Gary Furnas, a sales consultant at the dealership, said he hasn't been involved with a sale to a bank employee since November 2008. That customer, a Bank of America employee, bought a black Ferrari, but then kept it on the lot for two months because he worried that it was too flashy. It wasn't a matter of money - "he could have bought four or five of them if he wanted," Furnas said.

In the end, the customer asked the dealership to resell the car, and he opted for a less showy Maserati instead.

"He said he was getting too much grief from his co-workers, that he couldn't be seen driving it around his neighborhood or in the bank parking lot," Furnas said.

Employees at luxury retailers aren't the only ones who suffer when bonuses fall. At the Charlotte Rescue Mission, executive director Tony Marciano said that one donor, the owner of a small business, used to donate $4,000 to $8,000 a year. This year, he walked up to Marciano and gave him $40 in cash and said that was all he could do.

"He looked at me and said, 'Tony, my business has been so far off.' And he made the comment that it was because the bank bonuses were removed," Marciano said. "It wasn't that he didn't have a heart for us."

Read the full story at CharlotteObserver.com

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