Citigroup has told its senior staff that they will receive fixed monthly payments in addition to their salaries to compensate for new rules limiting their bonuses to up to twice the level of base salaries, Financial Times reported, citing unnamed sources.
More than 600 of Citi’s bankers in Europe are affected by the bonus cap and will therefore be paid such allowances, the report said.
The number of staff subjected to the European pay rules including the bonus cap has more than doubled this year after the banking watchdog broadened the definition for “material risk takers”. EU rules force banks to restrict bonuses to 100 percent of salary, or twice that level with explicit shareholder approval, according to the newspaper.
One senior Citi banker said the allowances had been structured so that the bank’s European staff would still receive the same amount of overall pay and a similar mixture of cash and shares as their US and Asian peers. “We don’t want people to have geographic preferences based on compensation,” the banker was quoted as saying.
Many of Citi’s rivals have introduced similar allowances, which depend on seniority, do not count toward pensions and can be adjusted each year.
Banks that have introduced such allowances, paid either in cash or shares, include Barclays, Goldman Sachs, Bank of America Merrill Lynch, HSBC, Standard Chartered, Lloyds Banking Group and Royal Bank of Scotland, the report said.
JPMorgan and Morgan Stanley are also said to be planning such schemes while others, such as Deutsche Bank, are simply increasing base salaries, it added.
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