Citigroup is to cap cash bonuses for bankers at below $100,000, the Financial Times said, citing unnamed sources. It said the move is aimed at defusing the public ire at Wall Street pay but could make it difficult for the US bank to retain its top talent.

The story did not elaborate on whether the bonus cap will apply to any specific section of the bank, such as its private banking arm, or to the whole business.

Citi declined to comment, the report said.

The 2009 bonus pool at the bank, in which the US government has a 27 per cent stake, would be in line with the one in 2008 – a relatively low level compared with other years, according to the newspaper.

Like other banks, Citi will also pay a large part of bankers’ and traders’ bonuses in stock that cannot be sold for a number of years, limiting the cash portion to below $100,000.

The move reflects the political storm over compensation at banks that have benefited from hundreds of billions of dollars in taxpayers’ funds.

Yesterday, US president Barack Obama unveiled plans to impose a levy on banks as part of an effort to recover bailout funds and reduce the government deficit. Bankers have complained that such action is part of an attempt by Washington to blame Wall Street for a crisis that was also driven by faulty policies from government, central banks and regulators.