Morning Coffee: Citi banker's $25m bonus despite dubious performance. No cockroaches to be seen here
If you're the sort of person who's running a big bank these days, getting an extra $25m bonus to keep you on your toes is to be expected. In fact, $25m is not much. David Solomon and John Waldron at Goldman Sachs got an extra $80m each earlier this year. Jamie Dimon at JPMorgan got an extra $50m in 2021. $25m is diminutive in this league.
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Nonetheless, Jane Fraser's extra $25m at Citi is a source of debate. Fraser was awarded it this week when she was made Citi's CEO and chairperson, thereby indicating to the likes of Vis Raghavan and Andy Sieg that they won't be displacing her anytime soon.
Citi said the $25m, which takes the form of restricted stock units that only vest in 2028, 2029 and 2030, is to ensure "management continuity" and a reward for Fraser's 'prompt and thoughtful' execution of its strategic priorities. This includes building a strong executive team (hiring the ambitious Raghavan for $23m and the allegedly sarcastic Sieg for $13m), simplifying the organisational structure (and cutting 10,000 jobs) and increasing Citi's share since the 2022 investor day (and by 38% this year) as the market has "applauded" her bold actions.
Not everyone is sure that Fraser is deserving, though. Bloomberg notes that banking analyst Mike Mayo has his doubts.
Mayo has long been a thorn in the side of Citi CEOs. - In 2020, he asked Fraser's predecessor, Mike Corbat, "Why not step aside now?". He's been more congenial to Fraser, but Mayo thinks the $25m is too much too soon. Citi still has worst in class efficiency, says Mayo. It still generates returns below its cost of capital. And it still has a regulatory consent order from the Fed, which Fraser admitted earlier this month will take "more time" to deal with as the bank grapples with its regulatory data monster.
In the circumstances, Mayo says Fraser's new bonus is unnecessary. Citi's bankers and traders, who complained about their own "abysmal" bonuses for last year, may be inclined to agree. Citi has a tradition of "paying in excess" without proper performance, says Mayo. That only appears to apply at the very top.
Separately, ever since Jamie Dimon said the C-word, people have been looking for cockroaches everywhere. Now senior executives are lining up to deny their presence.
Henry Kravis, co-founder of KKR, told Bloomberg there's "not one penny" of private credit debt in recent bankruptcies. Speaking during the firm's Q3 earnings call, Lazard chief executive Peter Orszag said private credit is fine and recent issues have been merely "idiosyncratic." Jon Gray at Blackstone agreed and said it makes no sense to presume that the bankruptcies of subprime lenders and First Brands portend anything worse. And even after Barclays lost $110m on subprime auto lender, Tricolor, CEO CS Venkatakrishnan said he really can't see any more cockroaches, although he confessed to being "no entomologist".
Meanwhile
Once Fraser has shown Citi can consistently produce returns north of 10%, its shares should finally join its peers in being valued at more than the sum of its parts. (Bloomberg)
Full-time workers in the Square Mile were paid an average of £103,352 in 2025, versus £93,438 in 2025. (Evening Standard)
Students aren't so sure about US MBAs now that student visas have been tightened. Applications to US business schools have fallen 1% while applications to global business schools are up 7%. (WSJ)
Hedge funds now manage $5 trillion of assets and had inflows of $34bn in the three months to September. (Financial Times)
After clearing out its high and low touch trading desks in London, ClearStreet has hired Paul Christophorou from UBS as head of outsourced trading for Europe. (The Trade)
RBC Capital Markets hired Amir Heravi, who led US equity flow derivatives trading at UBS, and Jason Hedberg, who has left his role as head of equity derivatives sales there. (Bloomberg)
Changpeng Zhao of Binance has been pardoned by Donald Trump. Zhao spent four months in prison after prosecutors said the illicit transactions Binance enabled under Zhao’s oversight caused “significant harm to U.S. national security. (WSJ)
Karen Ward from JPMorgan Asset Management thinks the British government needs to cut spending. "What really frustrates me about the whole conversation about the UK Budget is our problem in spending. If we were not willing to tackle the long-term structural problems we have in spending, we’re going to be talking about tax hikes every year. I think that’s miserable.” (Telegraph)
Forcing people back into the office makes them resign. McKinsey & Co. found that 43% of prime aged employees aged between 25 and 54 already work remotely and that 60% want this option. 17% of recent quitters left because flexible working had been removed. (The Hill)
AI workers are putting in 100 hour weeks. “Everyone is working all the time, it’s extremely intense, and there doesn’t seem to be any kind of natural stopping point.” Some quite like this: “We’re basically trying to speedrun 20 years of scientific progress in two years...It’s the most interesting scientific question in the world right now." (WSJ)
Meta's SuperIntelligence Lab is laying off 600 people. "It's never an easy decision to say goodbye to colleagues. These are talented people who have worked extremely hard and contributed to our Al effort." (Business Insider)
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