TORONTO, (Reuters) - In Bay Street lore, in the not so distant past, investment bankers and traders picked up their end-of-year bonuses in the form of a fat cheque, with the keys to luxury cars on offer to top performers.

Two decades and one monster financial crisis later, the best-paid bankers at Canada's big financial institutions expect this year's bonuses to be diced and divvied between equity and cash, and dealt out over as long as three years.

That's a response to a crisis that world leaders, international bodies and even some bankers blame in part on a skewed compensation model - one that rewarded short-term risk-taking, without considering long-term consequences.

This led directly to the sub-prime credit fiasco that triggered the global recession, some argue.

Canada's big banks, conservative and well-capitalised, weathered the financial storm far better than most of their international peers, and their investment dealer arms are enjoying a near record year as markets rebound.

But veterans also suspect bonuses may not reflect this as banks seek to change that "me-now" mentality and encourage their staff to take a longer view.

"Let's put it this way. Part of (the bonus) they will get this year, and part of it they will get in future years, provided certain results are achieved," said Liz Wright, a compensation practice expert from the global consulting firm Watson Wyatt.

Canadian banks have lifted their profit outlooks over the year, in part because of strong capital market performances. Thomson Reuters data show Canadian companies raised some C$44 billion ($42 billion) in equity and C$132 billion in debt so far this year, up from C$29.8 billion and C$118 billion in 2008.

In 2007, a record year for global capital markets, Canadian firms raised C$46 billion in equity and C$141 billion in debt.

"None of us 12 months ago would have predicted where we ended up on the year," said a banker at one of Canada's Big Six banks. Speaking on condition of anonymity because he sees the bonus issue fraught with political risk, he added: "All the investment banks have done very well."

An example of the political backlash was the criticism of Goldman Sachs Group Inc's plan to set aside nearly $17 billion for employee bonuses in the first three quarters of 2009, months after it repaid billions borrowed from taxpayers.

Like their global peers, Canadian banks will have to please both risk-averse shareholders and the bankers who brought in some of the biggest profits ever.

Big wins include the banks' fees from a $5 billion global debt offering from Caisse de depot et placement du Quebec, one of Canada's biggest pension funds, as well as more than $100 million in underwriting fees from Canada's largest ever equity financing - a Barrick Gold stock offering worth more than $3 billion.

The Barrick deal syndicate included the investment dealing arms of Canada's biggest banks, as well as international players such as Morgan Stanley & Co, JP Morgan Securities Inc, BNP Paribas (Canada) Securities Inc and UBS Securities.

Sources said bankers in the mining, energy and resource space will take home some of the biggest bonuses, where most of the mergers and acquisitions and other investments took place.

"But the guys in the tech, biotech and diversifieds space may be sucking wind," said a banker from an independent Bay Street firm.

Bonuses will likely rise by 10 to 50 percent across the Street compared with last year, one of the worst on record, said Joe Kan, one of Bay Street's top headhunters.

He said the best independent and boutique firms would probably pay out at the higher end of the range, and larger banks at the lower end.

But Canada's top banks are also changing the structure of their bonus compensation, often making deferrals and the split between cash and equity portions more onerous.

Some managing directors are being asked to accept up to 40 percent of their bonuses - equal to about a third of their annual salaries - in payments over periods of up to three years.

The deferred portion of bonuses is usually paid out equally over the deferred period. But some managing directors must wait until the end of final year to see even a penny of bonus money - an effort to retain staff and prevent short-term thinking.

Mr. Kan said that could backfire.

"The financial reward of working on Bay Street remains the primary motivator, as such compensation is one of the most effective recruiting tools," he said. "I've seen a number of changes to compensation systems over the last few market cycles, few of those changes were made to pay people more."

That's a far shot from the "eat-what-you-kill" compensation style of the '80s, where investment bankers were paid bonuses based on the business they brought in.

Then in the '90s, major banks moved to pool compensation, where departments shared the spoils of deals brought in over the year.

This year industry players are still stinging from dismal bonuses for 2008, when the worst economic turmoil since the Great Depression hammered markets.

"We expect to be paid this year, we already took our hits last year" said another banker at one of the Big Six.