BANKTHINK

Citi Revamps Executive Pay Plan, Awards Corbat $11.5 Million for 2.5 Months of Work; ING Group Appoints New CEO

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Receiving Wide Coverage ...

Citi's Executive Pay Plan: Citigroup is revamping its executive pay plan by now linking a portion of an executive's total compensation to the "company's performance relative to other big banks." These so-called "performance share units," payable three years after the firm meets performance goals, are being introduced after investors revolted against a proposed $15 million compensation package for former (and ultimately ousted) CEO Vikram Pandit in April. The new structure "will pay 40% of awards in cash, 30% in deferred stock and 30% in performance share units," the FT says. To get the maximum pay in the new category, CEO Michael Corbat "will have to achieve a return on assets of 0.85% and deliver a total shareholder return above four peers," the FT reports. Executive pay, generally, has remained a point of contention following the financial crisis, but any kudos Citi was set to reap for its revamped bonus plan were dwarfed by the announcement that CEO Corbat, who took over for Pandit in October, was being awarded $11.5 million for 2012. This compensation package puts him on par with B of A CEO Brian Moynihan and JPMorgan Chase CEO Jamie Dimon, despite the fact that, as Shanny Basar tweeted, Corbat's "only been CEO for 2 minutes." As this New York magazine blog post notes, "if Corbat made $11.5 million under the new rules, think about what he could have raked in under the old." Wall Street Journal, Bloomberg

ING Gets a New Executive: Ralph Hamers, the head of ING's Belgian banking business, will take over as chief executive of ING Group, the Netherlands' largest financial services firm by assets, in October. He will succeed Jan Hommen, who, according to the Journal, has said he wants to "spend more time with his children and grandchildren." Hommen's four-year term as CEO was set to expire in May, but he has agreed to have his contract extended to "ensure a smooth leadership transition," Bloomberg reports.

Financial Times

The European Commission has extended its 18-month probe into rate-rigging to include Swiss franc-denominated swaps. Previously, yen and euro interbank rates were the subject of the investigation. Now, a bank "implicated in all three rate-fixing cases could, for example, face fines of up to 30% of total revenues."

Mid-sized, often regionally focused banks are threatening "bulge-bracket" banks' share in the M&A advice and equity capital markets. Per the article, "tougher competition has … been encouraged by onerous new regulatory capital rules that are prompting investment banks to push resources into those business lines that are underpinned with less capital." Smaller groups are also muscling into the corporate debt capital market.

New York Times

Remember that lifelong ban the National Futures Association was thinking of imposing on former MF Global CEO Jon Corzine? Turns out, the board couldn't follow through on it, seeing as Corzine is not actually an NFA member. Also, any action against Corzine "could have complicated a continuing federal investigation into MF Global's misuse of the customer cash."

Washington Post

The paper has rounded up reaction to a report that found the five biggest U.S. banks provided $19 billion in mortgage debt write-downs to some 240,000 borrowers under the terms of last year's foreclosure settlement with state and federal authorities. Settlement proponents, including a HUD representative, appear pleased with the progress, while many consumer advocates "are disappointed that so much of the aid has come in the form of short sales."

Elsewhere ...

Bloomberg is reporting that the Consumer Financial Protection Bureau has "told at least four banks that it may sue them over vehicle loans and interest-rate markups by auto dealers that appear discriminatory."

Here's more evidence that we are seeing a populist resurgence of anger toward the nation's largest financial institutions: news and gossip sheet Gawker has published a rant entitled "It's Time to Break Up the Big Banks."

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Q1 Earnings Outlook to Put Focus on Lawsuits, Stress Tests, Lending
With JPMorgan Chase (JPM) and Wells Fargo (WFC) set to issue the initial round of first-quarter earnings reports Friday, big bank CEOs are bracing to answer questions about executive departures, capital shortfalls, seemingly unending legal risks and — oh, yeah — how they are going to make money.

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