Citigroup Inc. and Bank of America Corp. have cut the pools of bonus money set aside for traders and other employees, as Wall Street scrambles to adjust its expenses following a surprisingly weak December.
"If this was a movie, it would be 'Four Weddings and a Funeral'—there was a death that was totally unexpected"
- Richard Stein, a partner with Options Group
Choppy markets appear to have caught some bank trading desks flat-footed, wiping out gains they had accumulated earlier in the fourth quarter, traders and analysts said. Although not all big banks were hit with the holiday blues this past month, the late adjustments reflect the volatility in the results of the firms’ securities divisions, and how traders’ full-year performance can be cinched—or come undone—in a few frenzied weeks.
"What's unusual is that, normally, these decisions are signed, sealed and delivered before Christmas, but circumstances have changed at a number of firms this year," said Richard Stein, a partner with Options Group, a Wall Street recruiting firm. "If this was a movie, it would be 'Four Weddings and a Funeral'—there was a death that was totally unexpected."
Citi will pay bonuses to fixed-income and equities traders that are, on average, 5% to 10% less than what they earned a year ago, people familiar with the matter said. The bank had previously planned to leave its bonus pool unchanged from early-2014’s payouts, they said.
Citi co-President James Forese delivered the bad news to his trading executives Wednesday, the people said. In a meeting at Citi’s downtown Manhattan offices, Mr. Forese said the securities arm’s December results were worse than expected and the shortfall would come out of their employees’ annual bonuses, one person said.