Citi, that most innovative of banks is revamping its system for pay and rations. The board of directors consider that the bonus system over-incentivised the workforce, aking them too willing to work on risky deals that boosted profitability. The trouble is that without those deals they wouldn’t make any money. So their solution is to raise salaries and reducing bonuses for top bankers.
Citi began informing staff on Tuesday of the new pay structure, which had been in the works for the past few months, telling some senior bankers their salaries could rise by up to 50 per cent this year.
Citi’s move comes as US banks are striving to strike a balance between their desire to retain dealmakers and politicians’ demands to see a sharp reduction in Wall Street pay. Yep, that’s right Citi respond to the politicians’ demands by putting up salaries by 50%, just after Goldman Sachs announced record profits.
Which means that CEO Vikram Pandit will now be receiving 3 cents a week instead of his previous 2. Sounds like he was feeling the pinch.