Tiny bonuses likely at Investcorp this year

Bahraini investment bank Investcorp's fiscal year results can't exactly come as a surprise to those following the firm's fortunes recently. A dire six months to December 2008 saw the firm cut 20% of its workforce and the full-year $781m pre-tax loss posted yesterday means staff costs are going to continue to be pared back.

The group suffered big falls in its hedge fund investments (which posted a net loss of $393m) and heavy write-downs within its private equity and real estate arms, meaning Investcorp's first full-year loss since its establishment in 1982.

Not surprisingly, the firm is focusing on cost-cutting and its employees inevitably fell victim to this. Investcorp's headcount was 317 in 2009, compared to 405 in 2008 - reflecting its decision to lay of 90 staff in December.

Compensation is also on the slide, with average pay per employee slipping from $420k in 2008 to $378k this year. The total salary pot has fell by 30% year on year.

Perhaps more tellingly, though, the amount of money the firm has accrued for employee compensation to June 30 this year a dropped sharply - from $1.16bn in 2008 to just $28.6m this year - meaning much smaller bonuses are on the cards.

The firm has also shaken up its management structure, having scrapped the COO role (parting ways with 14-year staffer Gary Long) and brought in Citigroup veteran Mohammed Al-Shroogi as head of its Gulf activities.

Investcorp insists that this year hasn't been nearly as bad as 2008 (with a reduced net loss of $269.5m), and that hedge fund performance has picked up to make a return of 12.3%.