Citigroup Cuts Employee Bonuses to Deal with Sliding Revenues
Sagging revenue has prompted Citigroup (NYSE:C) to join other big banks including Morgan Stanley (NYSE:MS), Goldman Sachs (NYSE:GS), and Bank of America (NYSE:BAC) in trimming compensation. The lender cut 2011 bonuses by an average of about 30 percent in its investment banking division, said a Bloomberg report.
Bonuses were slashed by as much as 70 percent compared with the previous year for some businesses within Citigroup’s securities and banking unit, the report said, citing a source who asked to remain anonymous because the cuts have not yet been made public.
This month, Chief Executive Officer Vikram Pandit is cutting operating costs and firing employees in an effort to cope with shrinking revenue. The bank has announced plans to save $600 million in 2012 by cutting 1,200 workers from the division, with the possibility of further cuts down the road. Since 2009, the unit’s revenue fallen 21 percent, while employee compensation and other expenses rose 15 percent.
“If we do not see meaningful revenue recovery over the course of 2012, we will further restructure securities and banking,” Chief Financial Officer John Gerspach told analysts recently.
The cuts seem to be part of a global trend, according to the report. Pandit’s former employer, Morgan Stanley, decreased pay for senior bankers and traders by 20 percent to 30 percent and has put a cap of $125,000 on bonuses. Zurich-based Credit Suisse Group AG (NYSE:CS) cut pay for senior bankers by 30 percent and will give some bonuses in the form of bonds, while Bank of America Corp. has announced pay cuts averaging 25 percent, a freeze on base salaries for some Charlotte, N.C. employees and a $150,000 cap on bonuses. Goldman Sachs lowered discretionary compensation “significantly more” than the firm’s 26 percent devaluation, according to the firm’s chief financial officer David Viniar.
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