US banks’ London staff are closer to normal bonuses

London-based bankers working for America's giant investment banks moved a step closer to seeing bonuses return to normal today after another fundraising spree by their employers.

Morgan Stanley and Goldman Sachs each raised around $2 billion which will enable them to begin repaying money borrowed from the US government under the Troubled Asset Relief Programme (Tarp).

The banks will find it politically difficult to award bonuses to staff while still in receipt of government funds.

Morgan Stanley said it would issue fresh shares, some of which will be acquired by China Investment Corp and the Mitsubishi UFJ Financial Group, both existing shareholders. It wants to pay back a $10 billion loan.

Goldman, seeking to return a similar amount, raised $1.9 billion from selling shares in the Industrial Commercial Bank of China, cashing in on a recent surge in the stock price.

Meanwhile Bank of America, still reeling from its takeover of the stricken Merrill Lynch, said it had raised almost all of the $34 billion demanded by regulators after last month's controversial government "stress tests".

It said it will "comfortably exceed" the amount watchdogs said it needs to bolster its balance sheet.