The changes are not expected to affect overall compensation levels though some employees may be paid more and others less, and Citigroup expects to issue new stock options to help retain employees, according to people familiar with the plans.

The people requested anonymity because they were not authorised to discuss the plans.

Investment banking employees will be the first to see the changes, which will eventually be put in place throughout the New York-based bank, which employs roughly 300,000 people.

Citigroup declined to comment on the specific changes, which came in the wake of the Obama administration's naming this month of Kenneth Feinberg as a special master to oversee pay practices at companies that got 'exceptional' federal aid.

'Retaining and attracting the best talent is very important to the success of Citi and all its stakeholders,' the bank said in a statement. 'Any salary adjustments are not intended to increase total annual compensation, rather to adjust the balance between fixed and variable compensation.'

Lawmakers have attacked the payment of bonuses and other compensation they deem excessive to employees of companies that received government bailout money.

Citigroup is in the process of a stock swap expected to give the government a 34 per cent ownership stake.

The bank has lost US$36 billion in the last six quarters, but many of the top executives and bankers responsible for the losses have already left the company.

Mr Feinberg may review compensation for the top 100 salaried employees at seven companies, including Citigroup, American International Group, Bank of America, General Motors, Chrysler, GMAC and Chrysler Financial.

Prior to his appointment Mr Feinberg oversaw the government compensation fund for victims of the Sept 11, 2001 attacks. -- REUTERS