Big bonuses at Citigroup despite huge losses

James Moore,Deputy Business Editor
Wednesday 20 January 2010 01:00
Comments

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.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in