Is Citi paying the price for some poor bonuses?

28 February 2014

2 minute read

Is Citi paying the price for some poor bonuses?

Citigroup, if you remember, was supposed to have provided some pleasant surprises when it came to bonuses for 2013. Not only did it pay a lot of cash, but headhunters (speaking strictly anonymously), told us that Citi's fixed income sales and trading professionals were, "very happy" with their lot and that having been paid handsomely for three years running were in no mood whatsoever to look for jobs elsewhere.

The same may not apply, however, to Citi's equities professionals. Equity researchers at the U.S. bank are said to be particularly miffed following their recent payday. "Citi paid its equity researchers down by 10-20% last year," says one equity research headhunter, speaking off the record. "There are a lot of disappointed people there." Another equity research-focused headhunter, speaking equally anonymously, said that around 20% of Citi's researchers were zeroed at bonus time and are unhappy as a result.

Citi declined to comment on allegations about its bonuses. But its equity researchers do seem to be heading for the exits. As Financial News reported yesterday, Alastair Johnson, Adrian Cattley and Ruchi Malaiya have all left Citi's equity research team in the past few weeks and recruiters tell us other departures are in the pipeline. In 2013, Citi targeted its equities business for cost reductions. Is that process continuing?

In its defence, Citi points to the fact that it's recently recruited in four new equity researchers, outweighing the three who've left. They are: Stephen Bechade in telecoms, Yan Li in pharma, Sarel de Witt in metals and mining (based in Johannesburg), and Klas Bergelind in engineering. Recruiters claim Citi is only hiring juniors, but Bergelind and de Witt are both VP-level hires.

Oliver Rolfe, managing director at search firm Spartan Partnership, says it's wrong to pinpoint Citi as a particularly poor payer in equities. "A lot of people in the equity research market are keen to move – this isn’t something that’s particular to Citi," he tells us.

Not all equity researchers can move, however. The only ones who are finding jobs now are those with a strong franchise, says Rolfe. "The buyside is hiring, but the banks are still reducing costs.”