Big bonuses at Citigroup despite huge losses
Citigroup, the embattled American bank, yesterday unveiled huge losses for the second year in a row. The bank said it shed $1.6bn last year after it plunged into the red in the fourth quarter, largely thanks to repaying $6bn of US government support.
The total loss for the last three months of the year was $7.6bn. However, while the bank was in the red its performance was significantly better than in 2008 when total losses of $27.6bn were racked up.
The bank's pay and bonus pool actually fell by a fifth to $25bn, but Citi had 265,000 workers at the end of the fourth quarter, a significant reduction on the previous years. Staff numbers fell by 18 per cent, a smaller drop than the overall pay pool. The company said in a conference call that pay per employee would be "about the same" as last year.
However, in a sign that the controversy over bankers' pay and bonuses is not confined to Britain, John Vandeventer of the Service Employees International Union said: "This morning's report begs the question: how badly does a Wall Street bank have to screw up before they don't shower themselves in billions of dollars of bonus pay?"
JP Morgan on Friday reignited the controversy by announcing a sharp rise in bonus payments to its investment bankers, despite chief executive Jamie Dimon saying he was not satisfied with the bank's performance.
In another-bonus related development, Credit Suisse, the Swiss bank, yesterday said it would cut its global bonus pool by 5 per cent to pay for the controversial 50 per cent tax on UK investment bankers' bonuses imposed by the Chancellor, Alistair Darling. That made it the first bank to publicly give precise details on the impact of the tax. Bonuses for its top 400 managers in Britain would be cut by a further 30 per cent.
Citigroup chief executive Vikram Pandit insisted that despite its losses, his bank had made "huge progress" over the year. "It was our responsibility to get our own house in order. We greatly improved Citi's capital strength, reduced the size and scope of the company, and refocused our business strategy to take advantage of our unmatched global network," he said.
He also noted that loan losses are falling. Provisions in the fourth quarter were $8.2bn, down 36 per cent from the previous year and 10 per cent from the prior quarter.
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