Even TARP Banks Paying Up For Talent

Wall Street is caught up in a talent recruiting war, despite the recession and government-imposed limits on bonuses for the highest-paid bankers and traders.

That's the gist of a Wall Street Journal story detailing multi-million dollar packages banks have offered lately to recruit big producers away from rivals. The suitors include Bank of America, Citigroup and Royal Bank of Scotland - three institutions still on taxpayer-funded life support, whose respective governments control sizable chunks of their equity.

Pay caps imposed by Congress don't affect these offers, because the limits don't apply to new hires.

For instance, the WSJ says B of A recently hired top bond salesman Bryan Weadock away from JPMorgan by giving him a guaranteed two-year deal valued at about $6 million the first year. In recent years he'd earned "significantly less than $6 million," the story says, adding that JPMorgan has "a policy of not matching outside offers."

Citi and Phibro

Earlier this year, Citigroup reportedly offered nearly $2 million in an ultimately unsuccessful attempt to lure prime brokerage executive Kevin Harrison away from Deutsche Bank.

Citi also continues to mull ways to preserve the compensation of top traders and executives at its Phibro LLC unit. Andrew Hall, who heads that energy trading business, was paid an estimated $100 million last year. Hall and his team at Phibro earned hundreds of millions of dollars in trading profits for Citi over the years. This spring, they threatened to leave if their pay was cut by the rules, the WSJ says, citing unnamed sources. The issue is still unresolved.

Meanwhile, the WSJ says RBS has offered pay packages "at or above the industry's peak pay in 2007" to a number of stars it is seeking to recruit or retain.

Under a law enacted earlier this year, U.S. financial institutions that took TARP (Troubled Asset Relief Program) money can't pay their top 25 employees bonuses of more than 33 percent of total pay, and those bonuses must be linked to long-term corporate results.

But there's a catch. The rules only apply to the folks who made the company's top 100 highest-paid list for the year before. Therefore, a new hire doesn't fall under the restrictions.