So, as we speculated a few weeks ago, things have been afoot at Citigroup with regards to salaries.
It now emerges that the bank is indeed succumbing to the pressure to pump base pay, and is doing so by up to 50%, with the biggest increases reserved for investment bankers and traders and more measly increases awarded to anyone in consumer banking, credit cards, and legal and risk management. It's also splashing out on new stock options and will award employees one option for every share of restricted stock they've already accumulated. The bank is, however, at pains to point out that any increase in base pay will be compensated for by a proportionate reduction in bonus.
Will this stop Citigroup investment bankers going to work at the likes of Goldman Sachs and Deutsche Bank, where bonuses may or may not be very large this year? This seems unlikely. At 50%, Citigroup's salary increases appear to be smaller than those at both Merrill Lynch and UBS, both of which appear to have doubled base pay for MDs. And although Dick Bove thinks Citi's stock can hit $4, making $3 options look appealing, not everyone is so sure.
Brain drain takes its toll at Citi and BofA. (CNN)
Citi is also pleasing staff by replacing its smelly fridges. (Dealbook)
BofA's B plan in case Ken Lewis leaves. (IDD Magazine)
Banks too "exhausted" to reform bonuses says Adair Turner. (City Am)
"I would question whether [rising pay] is creating systemic risk. Traders have been high earners for centuries." (Financial Times)
"The unpleasant truth is that, today, the incentive to behave in this risky way is, if anything, even bigger than it was before the crisis." (Calculated Risk)
Remedies for too big to fail. (Financial Times)
Execution hires from Dresdner. (Financial News)
Cheyne Capital hires Morgan Stanley head of equity prop trading, Jorge Giampaoli. (Hedgeweek)
Severe shortage of female monetary policy specialists. (Bloomberg)
Half Britain's expats want to go home. (Bloomberg)
Hedge funders are a swine flu risk. (WallStreetandTech)