Citi 2009 bonuses similar to 2008 levels

NEW YORK (Reuters) - Citigroup Inc could pay commercial and investment banking bonuses for 2009 that are similar to 2008 levels, and may cap individual cash payouts at about $60,000, according to people that have been briefed on the plan.

Some details of the bonus plans are still being ironed out, and the payouts will vary across businesses and countries, the people said. But many employees have been briefed about the likely shape of their bonuses, which are set to be paid in coming weeks.

Wall Street bonuses have drawn new levels of scrutiny in recent weeks as banks gear up to pay their employees for 2009. Banks last year began recovering after the entire financial industry nearly collapsed in 2008 and required more than $1 trillion of U.S. government support.

To critics, the banking industry socializes its losses and privatizes its profits.

White House spokesman Robert Gibbs said last week that some Wall Street executives “continue not to get it” when it comes to big bonuses at bailed-out companies.

Regulators, lawmakers, and others are trying to determine how changing compensation packages might reduce the chances of future financial meltdowns. The Federal Deposit Insurance Corp is considering charging lower rates for deposit insurance to banks with pay practices that it deems superior.

According to a July report from New York Attorney General Andrew Cuomo, Citigroup as a whole paid $5.3 billion of bonuses for 2008.


For 2009, Citigroup is likely to pay up to 40 percent of bonuses in the form of deferred cash and stock, the sources said. The balance of bonuses will be in the form of non-deferred cash and IOUs that turn into common stock in early April, the sources said. They declined to comment because they were not authorized to speak on the record.

Those IOUs were part of Citigroup’s capital raising plan announced last month. The bank said it will sell $1.7 billion of these common stock equivalents, and the equivalents will convert into common stock on April 1 subject to shareholder approval at the bank’s annual meeting.

As part of that plan, Citigroup also sold $20.5 billion of common stock and convertible bonds. The bank repaid $20 billion of funds to the United States, in part to avoid being subject to government pay restrictions for 2010.

In connection with that capital raising, the U.S. government agreed to refrain from selling its roughly 7.7 billion shares for 90 days. That period is set to end in mid to late April, meaning employees will have time to sell shares before the government looks to sell its shares.

Officials at rival companies told Reuters that Citigroup employees will essentially receive at least 60 percent of their bonuses in cash or stock that can quickly be sold. That level is high compared to some rivals, which could help the bank retain employees.

But some Citigroup employees groused at the relatively low portion of the bonus that will come in cash.

Citigroup declined to comment.

Reporting by Dan Wilchins; editing by Carol Bishopric