Citigroup ups salaries as it cuts bonuses

CITIGROUP, the stricken US banking giant, will boost salaries by up to 50 per cent to prevent an exodus of top staff.<br /><br />The move follows high-profile complaints from the US government that bailed out banks and financial services firms are still handing out large bonuses despite their reliance on the taxpayer.<br /><br />There are fears that staff could flee Citi, led by chief executive Vikram Pandit, if bonuses dry up. <br /><br />The rises will apply across the bank, including in London, where Citi has an investment and commercial banking operation.<br /><br />Citigroup will raise employees&rsquo; monthly salaries by taking the money out of its end-of-year bonus pool.<br /><br />The group&rsquo;s top 100 employees are seeing their pay packages probed by Kenneth Feinberg, the new US &ldquo;Pay Tsar&rdquo; appointed by President Barack Obama, but there are no firm rules on pay for the group&rsquo;s other roughly 300,000 staff. <br /><br />A statement from the group said: &ldquo;Retaining and attracting the best talent is very important to the success of Citi and all its stakeholders. Any salary adjustments are not intended to increase total annual compensation, rather to adjust the balance between fixed and variable compensation.&rdquo;<br /><br />In late February the bank saw its shares dive by 40 per cent as it emerged the US government wouldtake a 36 per cent stake in the business in return for $45bn (&pound;27.4bn).<br /><br />Observers say similar pay restuctures may be rolled out at other banks like Bank of America, Morgan Stanley and UBS as bonuses are cut around the globe.<br /><br />Chris Pilling, chief executive of UK compliance and regulation information provider Complinet, yesterday called for pay packets in the City to be linked to staff behaviour.<br /><br />He said staff should get rewarded for sticking to the rules, not just for generating profits.<br /><br />Pilling also believes the majority of senior bosses in the City have learned their lesson from the financial meltdown and are taking compliance more seriously, but that financial reward should reflect this change in attitudes.<br />