COMP NEWS – Citigroup Inc. is changing its compensation structure for its UK bankers, allowing them to earn bonuses as high as six times their base salary. This new bonus structure would allow bankers and lenders to earn nearly three times what they can earn now.
Citigroup Inc. is lifting the limit on some of its top UK bankers’ and traders’ bonuses, following in the footsteps of rivals like JPMorgan Chase & Co. and Barclays Plc.
The change will allow the Wall Street firm’s so-called material risk takers to now earn a bonus that’s as much as six times their base salary, according to an internal memo seen by Bloomberg News. That’s up from a previous limit that restricted those employees’ bonuses to two times their fixed pay.
For now, Citigroup isn’t planning to substantially change these staffers’ fixed pay, according to the memo. That’s similar to the moves made by Barclays and JPMorgan, though material risk takers at those firms are now able to earn a bonus that’s as much as 10 times their base salary.
Citigroup asserts that these changes will allow the bank to attract and retain competitive talent. Detractors posit that such ambitious incentive structures would encourage bankers and lenders to take unnecessary risks.
Citigroup in recent years was one of many banks that also used role-based allowances, which are one-time adjustments to an employee’s salary that can allow firms to sidestep the bonus cap rules. As part of its changes, the bank will also reduce the use of these allowances starting in January, according to the memo.
Taken together, the changes allow the bank to offer competitive pay, “remain highly attractive” to talent and encourage the right behaviors, a spokeswoman for Citigroup said in a statement.
It’s the latest sign that some of London’s top bankers might soon have a paycheck that looks more like the bonus-heavy packages of their New York counterparts. It comes almost a year after UK officials scrapped the cap as part of a broader push to make post-Brexit Britain more attractive as a financial center.
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