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Citigroup Inc. (C), the third-biggest U.S. lender by assets, cut 2011 bonuses in its investment banking division by about 30 percent on average amid slumping revenue, according to a person briefed on the matter.
Some businesses within the securities and banking unit had bonuses reduced by as much as 70 percent compared with the previous year, said the person, who asked to remain anonymous because the decisions aren’t public. The unit, led by James “Jamie” Forese, includes bond and stock trading as well as debt and equity underwriting.
Chief Executive Officer Vikram Pandit, 55, is firing workers and shrinking costs in the unit as he grapples with declining revenue. The bank said this month that it will cut about 1,200 workers from the division to save $600 million this year and more reductions may follow. The unit’s revenue slipped 21 percent since 2009, while compensation and other operating costs climbed 15 percent.
“Our 2011 revenues in certain businesses in securities and banking were disappointing and unacceptable,” Chief Financial Officer John Gerspach, 58, told analysts this week. “If we do not see meaningful revenue recovery over the course of 2012, we will further restructure securities and banking.”
Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup, said she couldn’t comment on the firm’s pay plans.
Wall Street firms are reining in compensation. New York- basedMorgan Stanley (MS), Pandit’s former employer, is cutting pay for senior bankers and traders by 20 percent to 30 percent and is capping immediate cash bonuses at $125,000, people briefed on those plans have said.
Credit Suisse
Credit Suisse Group AG (CS), based in Zurich, cut senior-banker pay by 30 percent and may give some bonuses in the form of bonds backed by derivatives, people briefed on the plan said.
Bank of America Corp. plans compensation cuts averaging 25 percent, with cash bonuses capped at $150,000 and base salaries frozen for some bankers at the Charlotte, North Carolina-based firm, people have said. Goldman Sachs Group Inc. (GS) reduced discretionary compensation “significantly more” than the New York-based firm’s 26 percent drop in revenue, Chief Financial Officer David Viniar said Jan. 19.
Citigroup’s fourth-quarter profit fell 11 percent from a year earlier to $1.17 billion. Total revenue fell 7 percent to $17.2 billion, the lowest since the fourth quarter of 2009.
Bank executives have singled out particular units for blame since posting results Jan. 17, including the London-based equities-trading business run by Derek Bandeen. Annual equities- trading revenue plunged by $1.3 billion to $2.4 billion in 2011, Gerspach said on a conference call with reporters that day.
14 comments:
"Chief Executive Officer Vikram Pandit, 55, is firing workers and shrinking costs in the unit as he grapples with declining revenue. The bank said this month that it will cut about 1,200 workers from the division to save $600 million this year."
Does that average 500k per employee fired or is my calculater wrong?
He could probably fire the top five execs and get rid of the same 600 million.
In my opinion CEO and the like are gasbags that offer nothing to the bottom line. The only thing they know is how to vote themselves big raises and fire people. I guess firing people is their way of making money, but this guy has got to go. He has destroyed the company, the stock is crap at 3.08 and now he is firing people. He is doing a heckuva a job as George Bush would say.
I know the stock is 30.87, but don't forget the reverse split of 1 for 10. That didn't do him any good either.
Who are these people?
January consumer sentiment highest in nearly a year
http://www.reuters.com/article/2012/01/27/us-usa-economy-sentiment-idUSTRE80Q17K20120127
I doubt CONsumers will be rushing to buy much this year, given the fundamentals of a slowing global economy (despite "de-coupling", a word they use often on MSM fantasy vision media). The MSM will report an uptick likes it is meaningful and a "green shoot" (LOL remember that phrase) - as if.
The US economy has incrementally recovered, as in things are not quite as bad as they were a couple years ago, but that is not a real recovery, which only comes after the bottom of the economic cycle has been passed.
And that would require the bad credit deleveraging to be finished, which it is far from, yet.
Another 5-8 years, maybe. Today, not so much.
But it is an election year, and the Dumbocrats want you to think it's getting better, while Rethuglicans want you to think it's getting worse. Romney or Gingrich, Obama is pretty happy either way, as either running against him make his awful performance ignorable for enough voters to get him re-elected.
The election process is a year wasted though, as far as doing anything substantial to address the long term Budget issues - a roll of the dice. But probably a fairly safe bet, as EUrope will be slowly imploding all year.
The truth is likely that the recent uptick is very temporary, and a downtick comes next:
KD: "GDP: Is it what it appears?"
"the real problem is that a huge part of this came from inventory...
This is a problem because it's transient; to get the real GDP change you have to back it out. Last quarter it hurt, but this quarter it helped. So we have a net-net slowdown, which isn't so good. In other words, last quarter it was 1.8% + 1.35 = 3.15% annualized, this quarter was 2.8% - 1.94 = 0.86%.
At this rate we will print negative next quarter on a net-adjusted basis by about 2%.
The issue appears to be in services, which had a precipitous slowdown being up only 0.2%. With the majority of the economy being services....
Federal government spending was down 7%, all national defense -- non-defense spending was up 4.2%. State and local spending decreases accelerated from 1.6% to 2.6% (they're broke folks.)
The trade deficit was up from last quarter, now 582 billion on an annualized basis, with exports increasing only slightly but imports going up more. Thank Chinese labor and environment exploitation for that (again.)
The personal "savings" rate (income minus spend) was down again, and it appears we're back to trying to finance our living rather than decreasing spending.
This is the same pattern we saw in 2008 as the economy started to roll over."
So far, the US Budget cuts, while sounding large, are a minor slice out of the mountain of deficit spending/debt, and with Federal tax increases pretty much out of the question, with Rethuglicans under Grover "I'm an idiot" Norquist just saying 'no' - the only path forward is many more massive cuts, year after year, for a decade or more.
But States and locals won't be so constrained, they will be raising taxes somewhat, and cutting hugely, whatever happens or not in Washington - and any Federal failout will be out of the question for lower levels of Governemnt.
30 years of credit bubble finaincing has failed, now all that remains is "The Hard Choices" as John Maulding puts it. Unfortunately, politicians are by nature unable to make any such.
Vee haf vays of making you pay!
ZH: "It's Official: German Economy Minister Demands Surrender Of Greek Budget Policy, Says It Is First Of Many Such Sovereign "Requests""
"While over the past 2 days there may have been some confusion as to who, what, how or where is demanding that Greece abdicate fiscal sovereignty (with some of our German readers supposedly insulted by the suggestion that this idea originated in Berlin, and specifically with politicians elected by a majority of the German population), today's quotefest from German Economy Minister Philipp Roesler appearing in Germany's Bild should put any such questions to bed. And from this point on, Greece would be advised to not play dumb anymore vis-a-vis German annexation demands. So from Reuters, "Greece must surrender control of its budget policy to outside institutions if it cannot implement reforms attached to euro zone rescue measures, the German economy minister was quoted as saying on Sunday. Philipp Roesler became the first German cabinet member to openly endorse a proposal for Greece to surrender budget control after Reuters quoted a European source on Friday as saying Berlin wants Athens to give up budget control." And some bad news for our Portuguese (and then Spanish) readers: you are next."
That is actually a good thing, as these types of demands will cause local politians to 'just say no' much faster than otherwise, hastening the end of the EUro. This policy will invevitably backfire, as Ireland, Portugal and Spain are already threatening to revolt, and Greece has one foot out the door already. The only thing that will be achieved is getting rid of unelected "techocrats" (Bankstercrats) and their always-Bankster-first looting "policies".
So either Germany is very stupid for doing it, or very smart - as they have already secretly decided to leave the EUro, or for the EUro to leave them.
Are Deutschmarks being printed secretly already?
The EUrocRat bureaucrats are all in favor of this, of course, as the alternative means they would have to get a real job.
Amidst all this grief and sadness of what is happening, please read Jesse's column today. It says it all. It matters not where it is from. Love is the answer. Two things have impacted me today...1) Why do we become so insistent on putting our happiness around some stupid bricks and mortar? What/Why do I worry if I lose a house, for what really IS a house? A 'home' is based on the people who reside there. A house is simply shelter and much easier to access.
2) I hate to go all Captain and Tennille on you (I can picture some saying, WHO?) but love really DOES keep you together.
We need the rain to appreciate the sun; the shadows to balance the rainbows. Eventually, even through darkness we find light.
There is great comfort in knowing that even bankers will get theirs...if not in THIS world, then with the worms, or in the next, or be reincarnated as slugs
Thus endth the sermon of the day ;-)
Just go shopping as the twin towers were still burning. I will never forget George Bush for saying that. I think denial has got to be a river in America that everyone dips in daily. CL and I understand all too well what inflation is doing to our standard of living. Good comments again today GAW I read the same thing about the Germans. It's like trying to win a war without firing a shot.
Queen-besides the 'shopping' what are we actually supporting. GIVING a gift is its own reward. We have so MUCH when you think of it. More than we need. More than our parents and their parents and THEIR parents.
I think of stories of slaves, Holocaust survivors, immigrants, and others who began with nothing, worked 2 or 3 jobs so their kids could have advantages they didn't, those who were lucky to get 'crusts' and then I look at kids who think that finding their worth is involved in how much they can buy or download.
Just what are we DOING? What are we LOSING? Possibly our humanity? How can they know if they are not taught? And, when THEY are older who will complain loudest when they fail to 'care'...those who bore them and set them aside for the selfishness of MORE.
I have no problem with earning money through hard work, or even keeping it. I have a problem with those who (paraphrasing James 1:24) 'beholds himself in the mirror and goes off forgetting what manner of man/woman he was.'
Change comes when good men/women recognize injustice not because they MUST but because it is RIGHT...and for that the heart must change.
Sadly, I don't see the hearts of many in our world leaders recognizing anything other than political expediency.
(Forgive the reference...guess the 'sermonizing' attitude wasn't all gone ;-)
What worries me, CL, is that when the hard times start to really bite, there will be 10s of millions of people who won't be able to get their heads around the fact that the paradigm is changing. That things won't come easily. And their heads will literally explode, from self-inflicted gunshots or jumping off bridges. There's enough suicidal depression in today's time of plenty. When the squeeze comes, a lot of people aren't gonna wanna make it.
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