Associated Press

Citigroup Inc. is worried about losing employees and trying to figure out how to retain them.

Citigroup Chief Executive Vikram Pandit has talked with Treasury Secretary Timothy F. Geithner about the possibility of paying special bonuses to keep demoralized workers from getting poached by competitors, a person familiar with the matter said. The person, who spoke on condition of anonymity, was not authorized to disclose details about the private talks.

In particular, the New York bank is hoping to free its highly profitable energy-trading unit, Phibro, from federal compensation limits, the Wall Street Journal reported. The Treasury has not made a decision on the request, the paper said, and the amount of bonuses requested wasn’t disclosed.

A Treasury Department spokesman would not comment on the matter, and Citigroup said in a statement that it had not presented the Treasury Department “with a specific plan for retaining our people. We have also not discussed any specific plan or program designed to give people additional cash bonus payouts.”


Citigroup has received $45 billion in federal bailout funds over the last several months, and the government has agreed to insure a pool of more than $300 billion in Citigroup assets. Soon, the government will own a 36% stake in the bank. Companies that have accepted federal bailout funds are under tighter limits on how much they pay top executives.

The restrictions are intended to prevent the type of taxpayer outrage that ensued after the bailed-out American International Group Inc. paid $165 million in retention bonuses to employees despite having received more than $180 billion in federal funds.

Banks, though, are chafing at the restrictions. Some smaller banks have quickly repaid bailout funds to end the 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.

Executive compensation consultant Steven Hall said many employees are leaving big banks, especially to start their own firms or to join private firms without compensation restrictions. Normally, paying retention bonuses to prevent such an exodus would make good business sense.


“That’s part of the problem with the way the rules are written right now,” Hall said, referring to the Troubled Assets Relief Program, as the government’s bank rescue program is known. “There’s not a lot of flexibility in terms of how to compensate these people if they perform well.”