Citi's London MDs accepted lower salaries in return for faster vesting bonuses

It's bonus season in banks, but it is also salary season. At many banks, salary increases appear to have been marginal. At Citi in London, we understand that material risk-takers (MRTs) have been signing contracts that actually lower their salaries, but pay their bonuses sooner.

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The changes come after pre-Christmas complaints that the bank had a two tier compensation system in which historic managing directors (MDs) received high salaries with limited bonus potential, whereas new MDs received lower salaries with higher bonus potential. 

The high salaries paid to historic MDs at Citi reflected the requirements of the EU bonus cap, which restricted bonuses in London to 2x salaries. This was lifted for the current London bonus round, in which Citi said it might pay bonuses of up to 6x salaries instead. A subsequent loosening of the rules also provided for London banks to relax deferral conditions for material risk takers, most of whom are MDs. 

At Citi, insiders say the new lower MRT salaries are being accompanied by bonuses which vest within one year instead of four. MRTs must then wait another year for bonuses to be available, making the total deferral two years. In the past, they had to wait five years in total to receive a full bonus.

It's not clear how much lower Citi's new MRT salaries are. In 2024, the average MRT at Citi in London earned a salary of $594k and a bonus of $697k. Other banks have been able to flex their fixed pay without changing salaries; they paid salaries plus allowances whereas Citi did not.

Below MRT level, Citi insiders say salary increases were haphazard, as were bonuses. One Citi insider told us he received no increase at all and a dramatically lower bonus. Another says his salary was up in double digits and that he was told this was to compensate for sub-inflation increases in previous years. 

In investment banking, one Citi MD in London said Citi paid well for those who performed, but that this was dependent upon actual revenues generated rather than pipeline. He observed that many of the recent hires made by Vis Raghavan have joined at a global level, enabling them to be paid according to US norms.

If anyone deserves a larger bonus at Citi this year, it may be Jenny Mai, the bank's Hong Kong-based head of equity derivative sales. Mai wrote on LinkedIn that she increased PnL 900% last year.

Citi declined to comment on Mai's achievement. However, a spokesperson said the bank welcomes changes to remuneration rules for UK Material Risk Takers, including deferral requirements. "These changes allow us to better align our UK MRTs with Citi's broader compensation structure and will help keep our compensation competitive within the UK regulatory landscape," she added. 

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