Citigroup is reportedly in the process of enhancing fixed pay of its senior executives in order to make up for the European Union’s (EU) cap on their bonuses.
The move aims to compensate the officials for what they lose as a consequence of the latest EU rules, which restricts banks from paying employees bonuses over 100% basic annual salary, or 200% after shareholders’ approval.
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In recent weeks, the bank sent out letters to senior staff informing them that they will receive fixed monthly payments in addition to their salaries, several people close to the situation told the Financial Times.
The bonus cap is said to have affected more than 600 Citi’s bankers who will be given these allowances.
In the recent past, the US bank has already paid similar allowances to around 300 of these staffs.
Many of Citi’s rivals including RBS, Barclays and Bank of America have brought in similar allowance structures, also known as ‘role-based pay’.
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By GlobalDataThe payments depend on seniority, do not count toward pensions and, like bonuses, can be adjusted upwards and downwards each year.
