Bankers always expect surprises during bonus season, but for Citigroup bankers the email they received at the end of last week was something of a shock. Indeed it is likely to prove a major headache for any dissatisfied staff member looking to jump ship - as well as for the headhunters looking to facilitate the move.
The new policy revolves around notice periods and the bank's attempt to make them more rigid. The move is in response to what Citi informs staff is an attempt to minimise disruptions to both business units and clients. The bank has declared that a managing director must now give 75 working days notice of their 'intention' to leave; a director must give 50 days and a vice president 30 days.
Hence for a managing director, the new rule means that should they resign immediately after receiving their bonus (at the end of each January) they could not start at a new employer until early May. It will be at the discretion of individual business units whether they will continue to ask defecting staff to work out these months, or give them gardening leave. However, it will no longer be possible for the new employer to 'buyout' the gardening leave period and have the banker start straightaway.
The intention is plain. For the firm that is hiring the senior Citigroup banker, a large chunk of the year will be wasted before they can start at their new firm and make an impact. If you consider that - for senior staff - a guaranteed bonus will often be offered in year one; and that the firm will have to buyout the unvested stock received from Citi in previous bonus rounds, this makes it quite a costly recruitment exercise. That fact is clearly designed to ward off other banks from poaching staff from Citi.
Nor is Citi alone. Morgan Stanley is also reckoned to have employed a similar policy when John Mack returned to the firm, and instituted three month notice periods.
In the me-too world of investment banking, it can only be a matter of time before other firms adopt similar policies. But whether the policy will actually lead to less poaching of staff is debatable. More likely it will just add a further cost to the annual merry-go-round of post-bonus people-moves.
Citi staff, meanwhile, remain unclear whether this policy will kick-in during this bonus round or 2007's. Some might speculate that if a rival bank were trying to hire a senior China banker from Citi, it could mean their arrival would be delayed till almost the end of the second quarter.