According to a report in the Financial Times, Merrill Lynch brought forward bonus payments to employees by one month to beat the closing of its sale to Bank of America.

The report says the money was paid as Merrill’s losses were mounting and whilst the acquiring bank was seeking additional funds from the US government’s troubled asset recovery programme to help close the deal.

The takeover was approved by both sets of shareholders on 5 December 2008 and three days later, Merrill’s compensation committee approved the bonuses, which were paid on 29 December says the FT. It said company officials told it that in past years, Merrill had paid bonuses in late January or early February. A source estimated that about $3 billion to $4 billion was paid out in bonuses in December. In total, Merrill provided for $15 billion for 2008 compensation, 6 per cent lower than the total in 2007 despite a $21.5 billion operating loss in the fourth quarter.