NEW YORK – Citigroup Inc., which has received $45 billion in federal bailout funds and potentially could have to raise more capital based on "stress test" results, is requesting permission from the Treasury Department to pay out special bonuses to certain workers, The Wall Street Journal said late Tuesday.
Banks that have accepted federal bailout funds are subject to greater government scrutiny and limits on how much they pay their top executives. The restrictions are intended to prevent the outrage that ensued after it was disclosed that insurer American International Group had paid out $165 million in bonuses to employees despite having been bailed out to the tune of more than $180 billion.
But bank employees are chafing at the restrictions, and companies have said the pay caps make them vulnerable to poaching by competitors. Some smaller banks have quickly repaid bailout funds in order to remove themselves from heightened oversight. Several of the biggest bailout recipients — including JPMorgan Chase & Co., Wells Fargo & Co., Morgan Stanley and Goldman Sachs Group Inc. — have said they want to repay the government as soon as possible.
Citigroup is seeking Treasury permission to pay retention bonuses to workers it says are demoralized amid the company's restructuring and sharp drop in stock value, according to the paper, which cited people familiar with the matter. The New York-based bank, which recently saw a shuffling of its board of directors, also is hoping to free its highly profitable energy-trading unit Phibro from federal compensation limits, the paper said.
The bonus plans could include a scenario in which payouts would consist mainly of stock which would vest over at least three years, and the awards would likely be worth at least half of an employee's cumulative pay over the past three years, the paper said.
The Treasury hasn't made a decision on the request, which was made by Citigroup Chief Executive Vikram Pandit to Treasury Secretary Timothy Geithner at a meeting earlier this month, the paper said. The amount of bonuses requested wasn't disclosed.
Calls to Citigroup and Treasury seeking comment weren't immediately returned late Tuesday.