Grey skies ahead for bonuses?

With banks preparing to post third quarter results and analysts slashing estimates for brokerage firms, could bankers have been a little too optimistic about this year's bonuses?

CNNMoney.com says an M&A and equity trading slowdown could see banks such as Goldman Sachs, Lehman Brothers and Bear Stearns delivering disappointing news next week. And what's more, the downward trend is set to continue.

"I think what you're going to see is the cracks in the facade begin to appear," says David Easthope, analyst with the securities and investment group at independent research and consulting group Celent. "There's no way these near-perfect conditions in the market can continue."

According to information from data provider Dealogic, M&A volume fell in the third quarter. CNNMoney.com reports that Goldman Sachs saw deal volumes tumble to $77.2bn in the quarter from $271.7bn in the second quarter, while Lehman Brothers saw volumes sink 71% to $32.5bn over the same period.

Similarly, Morgan Stanley's global M&A deal volume dropped to $115.5bn from $195.1bn and Bear Stearns saw volume tumble to $2.9bn from $29.4bn.

Dick Bove, analyst at Punk, Ziegel & Co., warns that investment banks may continue to see profits slide next year if the U.S. economy falls into a recession.

Given expectations that the sector faces some bumps ahead, should bankers in London start revising bonus expectations, and even begin bracing themselves for a cull?