Bank bonuses under threat as Citigroup reveals poor Q4 results

Many remuneration experts expect senior staff to be among those forgoing big bonuses, partly to appease disgruntled equities, bonds and forex traders, as well as corporate financiers, who may receive little or nothing this time round.

Jonathan Evans, chairman of City of London headhunters Sammons Associates, said after the disappointing figures from Citigroup, which missed Wall Street expectations: “They [senior bankers] have to be seen to be whiter than white, and not to be necessarily paying themselves but the performers in their teams.”

Partly-taxpayer-owned Royal Bank of Scotland, where bonuses for 2011 are rumoured to in the range of £400-500 million, has come under strong political fire for its looming largesse.

Steve Baker, a Conservative MP, said: “It’s extremely difficult to justify any bonus at all at a state‑owned, bailed-out bank.”

Bankers at Citigroup, Goldman and Morgan Stanley are expected to hear about their bonuses this week, but analysts said pay-outs could be sharply down or even passed altogether, mirroring the 2008 recession.

Jason Kennedy, who runs US headhunter Kennedy Group, said: “This will probably be the worst year for zero bonuses we’ve seen, although those that have done well will still get something.

“Global heads and senior managing directors are among those that will get nothing. They’re the expensive staff, and they’ll be living off their higher salaries.”

The reignited bonus issue, with British banks due to go public on them either at their results next month or when they issue their annual reports some weeks after, comes as Citigroup revealed tough trading conditions had prompted an 11 per cent slide in Q4 profits.

The third-biggest US bank posted a fall in net income to $1.16 billion (£755.5m) from $1.31bn (£853.3m) in the same quarter of 2010. Citigroup said the European debt crisis had battered capital markets, hurting its trading revenues, while also putting off corporate clients from doing takeover deals.

Analysts said the results presaged likely profit falls at Citigroup’s rivals as well. Jeffrey Sica, president of Sica Wealth Management in New Jersey, branded Citi’s earnings miss as “horrendous”, adding: “It’s a very negative sign for banks in general.”