Morning Coffee: Does Citadel pay an average of $1.2m to all who work there? British bank's dubious pay negotiation tactic

Miami-based Citadel is not a British hedge fund. As such, even though several of its UK entities release regular accounts disclosing their pay, it's never been known how much Citadel pays on a global basis. Until now. 

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Bloomberg has seen documents released by Citadel for a recent bond offering; they imply that average compensation at the firm is in seven figures.

The documents show the fund spending $4.5bn on operating costs in 2025. Pay is not broken out for the full year, but in the first nine months Bloomberg says compensation accounted for around 84% of Citadel's operating costs. On this basis, the firm spent $3.8bn paying its people last year.

Citadel's recent bond documents also don't say how many people it employs. But last year's regulatory filings from the firm said it had 3,153 employees, of whom 39% were in "investment roles" like analysis and portfolio management. 

On this basis, Citadel the hedge fund seems to pay an average of $1.2m to all who work there. Sister company Citadel Securities (the market maker and electronic trading firm), which was on track to pay each of its people $2m the last time we looked.  

Neither Citadel nor Citadel Securities are operated on the basis of equal pay for all who grace their desks, however.  $1.2m may be an average pay figure at the hedge fund, but it will be heavily skewed towards high performing investment staff. In the UK, for example, 184 employees at Citadel's administrative arm each earned $498k for 2024; 24 top employees at the investment arm each earned $21m.

Bloomberg observes that Citadel's costs increased as performance faltered. The bond documents show that operating costs at the firm globally rose by 4% last year, even as net investment gains fell by 14% (although Citadel still generated over 10% in net returns). Citadel charges investors for employees pay in the form of pass through fees. In theory, pay should be lower when performance falls. In reality Bloomberg says multistrategy firms' different investing groups can keep overall pay costs high because even when one strategy underperforms others still need to be rewarded.

Citadel asks its employees to reinvest half their bonuses above an undisclosed threshold into its Wellington Fund. A Citadel spokesman told Bloomberg that this gives them an "incredibly strong alignment of interests to our performance since they participate on the same economic terms as our external capital partners.”

Separately, it's not unusual for employees of banks to hold bank accounts with their employers. 

Lloyds Bank in the UK is a case in point. The Times reports that Lloyds Bank decided to take advantage of employees' bank accounts when negotiating their pay. 

The British bank reportedly looked at 'aggregated data' from the bank accounts of its junior workers and then compared their spending habits to the general public so that it could determine how much to pay them. 

The revelation has upset some Lloyds employees, and there is talk of "sinister" behaviour.  However, it seems to have worked in employee's favour: they received a pay rise of between 7% and 9% as a result.

Lloyds' CEO Charlie Nunn offered words reassurance. It had been “a legal use case of using aggregated data for a relevant business outcome,” he declared. That's all fine then. 

 Meanwhile... 

Singapore’s GIC redeemed $250m from Jain Global. This happened after the person who made the Jain Global investment at GIC left for Blackstone. (Bloomberg) 

This is just under 5% of Jain Global’s AUM. Jain Global requires investors to give 90 days’ notice and then only 12.5% of their money can be withdrawn in each quarter. Assuming the notice just went in, this would mean the AUM impact will be slow. Millennium’s terms are even more onerous, and its full redemptions take over five years. (Rupak Ghose) 

Arthur Goossens, BNP Paribas' co-head of commodities trading, has gone to Schonfeld. (Bloomberg) 

NatWest paid its average material risk taker a £219k bonus last year, and £185k salary. (Financial News) 

Deutsche Bank's private bank unit is hiring up to 50 relationship managers in its emerging markets private banking unit this year as it expands in the Middle East and Asia. (Reuters)  

"I talk to my friends who work in financial services. They say this is the brain they’ve always wanted to have at my side—in terms of the capability to do arbitrage, to create decks that used to take me six hours, it’s taking six minutes, and now I can actually do the thinking that I want to do." (Derek)  

Here are 12 Claude prompts that replace $150K/year investment banking work. (X)

The trouble with using an enterprise AI system: The AI can pass that information along to anybody else who does your job, or in some cases just do the job itself. Over time, you could become a lot less valuable to your employer—and a lot more replaceable. (WSJ) 

If student loan repayment thresholds in the UK hadn't been frozen, the highest tax rate would kick in at £70k. Instead, it's £52k. (The Times) 

The trouble with taking your employer to court. “I usually indicate to clients who are thinking of suing — whoever they are — that the best day in your lawsuit is generally the day you file the lawsuit.” (Bloomberg)  

If you want two children in New York, you will either to earn $5m or nothing at all. The more financially secure you are, the more children you are likely to have. That means government support at the low-income end, and high incomes at the high income end. (Thebiggerapple) 

Typically at night, a fluid that surrounds our brain flushes out toxins, cell debris and junk proteins that build up during the day. If we don’t sleep well, our brain tries to compensate while we’re awake—triggering pulses of fluid that coincide with sharp reductions in attention lasting a few seconds. (WSJ)

Michael Dennis of Ares bought a 5 bedroomed arts and crafts house in Poole harbour and now he wants to demolish it and build a 6 bedroomed house with an indoor swimming pool, sauna, gym, yoga room and grand entrance hall. His wife is independently wealthy. (Independent) 

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