Citigroup Said to Keep Bonuses Flat or Down for Bankers, Traders

I-bankers could receive payouts that are close to flat compared with 2012, while traders and salespeople could get cuts of 2 percent.

(Bloomberg) — Citigroup Inc.s bonuses for investment bankers and traders probably will be little changed or drop from last year as the third-largest U.S. lender seeks to reduce costs, according to a person briefed on the policies.

Investment bankers could receive payouts that are close to flat compared with 2012, while traders and salespeople could get cuts of 2 percent, said the person, who asked for anonymity to discuss confidential pay plans.

While revenue in the securities and banking unit rose 6 percent through the first nine months, the bonuses probably wont rise because people will earn 5 percent to 10 percent less than they would have a year ago for the same amount of production, said another person with direct knowledge of the New York-based banks policies.

Chief Executive Officer Michael Corbat, 53, who took over 14 months ago, is squeezing expenses amid investor pressure to improve returns. Citigroup, which doesnt break out compensation for the securities unit, cut bonuses as much as 10 percent last year, people familiar with the matter have said. Through the first nine months of 2013, investment banks that do disclose bonus pools for bankers and traders have cut amounts set aside.

Compensation for Wall Streets equities salesmen and traders probably rose in 2013, while total pay for employees in fixed-income units may be down 10 percent, according to Options Group Inc. The gains could be biggest for those in equity derivatives, while people in interest-rates trading and securitized products deal with a 19 percent drop, according to the November report from the recruitment firm.

Individual Variables

Citigroups individual bonuses will vary based in part on the results of the unit where each employee works, how revenue was generated and the riskiness of the activity, according to the two people. Traders get paid based on the revenue they generate, while investment bankers are paid on a broader array of measures, one of the people said.

Danielle Romero-Apsilos, a company spokeswoman, said the bank didnt have any comment on its bonus plans.

Securities and banking revenue rose 6 percent through the first nine months of 2013 at Citigroup, excluding some accounting adjustments. Investment-banking revenue, at $2.94 billion through the first nine months, climbed 10 percent from the year earlier, according to filings.

Revenue from fixed-income markets fell 5 percent to $10.78 billion, while revenue from equity markets rose 24 percent to $2.48 billion, filings show.

Fourth-quarter revenue from capital markets and investment banking probably will fall short of last years final three months, Chief Financial Officer John Gerspach said Dec. 10.

The bank will continue to stay disciplined on compensation in the institutional business, which includes securities and banking, Gerspach said.