Meanwhile, the Financial Times reported that Goldman Sachs’s top seven executives have said they will forgo bonuses, and their Citigroup counterparts have told the board about their intention to also do so.

Mr Thain has told Merrill’s board that neither he nor four other top executives, including president Gregory Fleming and chief financial officer Nelson Chai, should receive a bonus, according to a statement by Merrill Lynch.

John Finnegan, chairman of the Merrill Lynch management, compensation and development committee said: "The board accepted Mr Thain and his management team's request and applauded the Thain-led management team's superb performance in an exceptionally challenging environment."

The bonus news comes after The Wall Street Journal reported that Mr Thain had told his board he deserved as much as $10 million for his bonus this year. Merrill, which is to be acquired by Bank of America, declined to comment.

At Morgan Stanley, Mr Mack wrote to staff saying that “given the extraordinary challenges facing the financial industry”, he and the company’s co-presidents, Walid Chammah and James Gorman, would forgo their bonuses. The next tier of executives would see their compensation fall by 75 per cent from 2007 levels, media reports said.

Under the firm’s new bonus scheme, part of employees’ remuneration will be subject to a three-year “clawback” provision, meaning the company could take back some of a bonus if an employee caused, among other things, “a restatement of results, a significant financial loss or other reputational harm to the firm.”