Wall Street's bonuses fell nearly 25 percent in 2011, a New York City fiscal watchdog estimated on Monday, a less severe drop than the industry has anticipated, though still likely to deliver a blow to the economies of New York City and New York state.

Compensation experts had said this important component of total wages earned by securities industry employees would plunge 30 percent to 40 percent.

However, the decline in bonuses as estimated by the New York City Independent Budget Office was almost twice that forecast last week by the state comptroller, who said bonuses would shrink 13 percent, to $121,150 per person.

Profits earned by Wall Street firms were estimated by the Independent Budget Office at $10.5 billion for 2011. No comparable figure for 2010 was immediately available from the IBO.

Last week, State Comptroller Thomas DiNapoli forecast that Wall Street's profits in 2011 would not top $13.5 billion, down sharply from $27.6 billion in 2010.

Wall Street, which powers the economies of New York City and New York state, is expected to shed 4,300 jobs in 2012, while wages, including bonuses, will fall 7.5 percent, the Independent Budget Office said in a statement.

The forecasts by the Independent Budget Office, which plays the same role for city that the Congressional Budget Office does for Congress, show ongoing struggles for the securities industry, which faces stiffer federal regulations and reduced trading volume.

Europe's debt problems also present a challenge for both Wall Street and the U.S. financial sector.

U.S. banks have about $80 billion of exposure to Spain, Italy, Portugal, Ireland and Greece, the New York City Council Finance Committee said in a separate report issued on Monday.

On a positive side, industry reports suggest Wall Street has been pricing in the possibility of a Greek default since early 2010, the Finance Committee report said.

Both the Independent Budget Office and the Finance Committee were presenting analyses of Mayor Michael Bloomberg's $68.7 billion budget plan.

(Reporting by Joan Gralla; Editing by James Dalgleish and Dan Grebler)