Citi, M. Stanley may pay $3 billion to keep brokers: report
NEW YORK (Reuters) - Morgan Stanley (MS.N) and Citigroup Inc (C.N) are preparing to pay $3 billion of retention awards to brokers to keep them from fleeing a brokerage joint venture, the Wall Street Journal said on Friday, citing people familiar with the matter.
Terms are not expected until later this month, but the issue could grow politically sensitive because the government has injected money into both companies, the newspaper said.
Morgan Stanley is paying Citigroup $2.7 billion to take control of the joint venture, which will combine its brokerage operation with Citigroup's Smith Barney unit.
Citigroup has taken $45 billion from the Troubled Asset Relief Program, while Morgan Stanley has taken $10 billion.
A spokesman for the joint venture did not immediately return a call seeking comment.
Broker retention payments have long been common on Wall Street, and brokerages themselves may become more important to banks because the credit crisis has curbed merger, underwriting and trading activity.
But many investors, politicians and regulators have questioned the propriety of the financial industry paying out big bonuses at all as losses mushroom from bad debts.
According to the newspaper, not all of the joint venture's 20,000 brokers would get retention payments. It said a broker who brought in $1 million in revenue last year might expect to get $500,000 to $1 million, depending on how much he continues to produce.
(Reporting by Jonathan Stempel; Editing by Gary Hill)
- North Korea says Kim's powerful uncle dismissed for 'criminal acts'
- Thai PM calls snap election, protesters press on |
- Protesters fell Lenin statue, tell Ukraine's president 'you're next'
- Singapore hit by rare outbreak of rioting, 27 arrested |
- Venezuela's Maduro to raise pressure on business after local vote
Nelson Mandela: 1918 - 2013
Reuters looks at the life and times of Nelson Mandela, an icon of peace and reconciliation who came to embody the struggle for justice around the world. Video