Investment banks such as Morgan Stanley made a head start last week when they paid staff in Asia excluding Japan bonuses of up to two years' salary, according to market sources.

'Most people got one to two years, up about 30 per cent from a year ago,' one source said, adding that the payout was the best since 2000. 'The more senior the bankers, the more they get.'

So far, three banks - Morgan Stanley, Lehman Brothers and Goldman Sachs - have told bankers about this year's bonus, generally paying between 20 and 50 per cent more than last year, varying between fixed-income, equity and corporate finance divisions.

Some senior bankers received fat cheques that were double what they had last year.

'In the good days, we got paid at least five to six years' bonus. One to two years' bonus is hardly anything if you take into account that we worked a lot harder this year than in 2000,' said another banker at a rival American powerhouse.

This year, Morgan Stanley's share of equity and equity-linked transactions in Asia totalled US$3.4 billion, up sharply from $1.4 billion last year, Bloomberg figures showed. The firm's equity side would gross $85 million, based on a standard 2.5 per cent commission.

David Parker, chief operating officer of Sun Hung Kai & Co, one of the largest local brokerage firms, said: 'Early this year, we decided to abolish the 13-month yearly payout, but we are considering whether to give back the bonus amid the good business.

'In the first half of the year, our securities business was a loss-making part of the group whereas in the second half, we are making money, and good money.

'I think other brokerages are more or less the same.'

Sun Hung Kai grossed meaty spreads by providing margin trading for as much as HK$10 billion for four IPOs just this month, with the interest rate charged ranging between 2 and 5 per cent depending on customers.

The future is also looking brighter on the hiring front. For the first time in three years, top investment banks are hiring after slashing nearly half of their staff during the market downturn.

According to Harry O'Neill, Asia managing director of global head-hunter firm Whitney Group: 'As far as new head counts as opposed to replacement head counts is concerned, it was very, very tight during 2001-2003, as the banks went through major restructuring and cut-back exercises.'

'That is now turning around. Banks once again have got new head counts, not a huge amount yet but the flow of deal activities has picked up and as a consequence, banks need to hire staff to handle that,' said Mr O'Neill.

Over the past three years, major global investment banks slashed some 40 to 50 per cent of jobs as the financial market and economy experienced a downturn. But these banks are now hiring 5 to 10 per cent of the jobs back.

According to Whitney Group, the new hiring is part of a global trend.

'There is definitely a recovery, but there is no way that all the jobs being lost are going to be recovered in 2004,' Mr O'Neill said.