The good news about Citi's London bonuses is that a high proportion come in cash. The bad news is that those cash bonuses might not have been too great last year - at least in credit trading, where people have been leaving as a result of what headhunters suggest is lingering disgruntlement about 2016 pay.
Recent exits include Daniel McNally, a former trader on Citi's London CDS book, who spent five years at the bank after joining as a graduate in 2012, and Rob Fawn, a former European high yield credit trader at Citi, who'd been at the bank 13 years. McNally is off to Morgan Stanley and Fawn is joining the London office of PGIM, the investment management arm of Prudential. The two exits follow that of Omar Ghalloudi, Citi's former head of investment grade single name credit trading, who left after less than a year and joined Deutsche Bank in May.
Citigroup recently released its 2016 results for its London-based global markets business. They show the bank cutting London markets headcount by 14% or 551 people last year, and pay per head falling marginally from $287k to $277k.
Along with most banks, Citi's credit trading business is doing well this year. Revenues were up 18% year-on-year in the first half. In July, Citi promoted Amit Raja to head of credit trading for EMEA after former head Fred Jallot left in May.
If the claims about last year's bonuses are correct, Citi may need to make amends in 2017. London credit headhunters say their market is picking up, albeit slowly. "Teams are so lean that whenever someone leaves, finding a replacement becomes very important," says one, speaking off the record.
After years of being cut and overlooked because of its capital intensity, credit is looking like a good place to be. Goldman Sachs is reportedly building its flow credit trading business after a succession of disappointing quarters in fixed income. Last week, Jes Staley, CEO at Barclays, suggested that the bank plans to allocate more capital to credit trading after revenues rose 18% in the first half. Unlike equities and FX traders, most credit traders will never be replaced by algorithms, said Staley. The credit market is too illiquid and complicated.