Boston, MA 09/02/2014 (wallstreetpr) – Diversified financial services provider Citigroup Inc (NYSE:C) had decided to take the allowance route to buck the limit imposed on bonus by the rulers in the Europe so as to make its employees keep smiling and not worried over the latest law that could tighten their purse.
Allowance Increased
The law in the Europe had put a curb on the bonus payment limiting to double the amount of base salaries only. This had the potential to hurt over 600 employees of Citigroup Inc (NYSE:C) in the region. Therefore, the company had preferred to boost its fixed pay for its high earners to compensate the potential loss of bonus payments, Financial Times reported.
The New York-based bank had reportedly sent out letters to its senior staff in the European region in the recent weeks that they would be paid fixed monthly allowance apart from their salaries, the report said citing people familiar with the situation.
In the past too, Citigroup Inc (NYSE:C) had resorted to paying similar allowances to alleviate the regulatory threats on higher bonus payment delay for its key staff. At least half of the existing staff in the region seemed to have benefited earlier.
Geographic Preferences
The latest move by the Citigroup Inc (NYSE:C) is not only meant to compensate the possible loss on account of bonus cap but also make sure that the employees were forced to opt for geographic preferences merely on compensation ground. It was also meant to reassure the employees that the employees were paid similar to their peers in the U.S. and Asia and that there was no disparity due to the recent bonus cap law.
The number of employees covered under the revised bonus rule has also doubled following the regulator’s clarification on the definition for material risk takers.
Other Banks
Since the law is applicable to all, Goldman Sachs Group Inc (NYSE:GS) had already taken the steps to pay such allowances to buck the bonus limit threat. JPMorgan Chase & Co. (NYSE:JPM) and Morgan Stanley (NYSE:MS) are also reportedly considering similar moves.
