People close to the situation said last week's government rescue made it virtually impossible for Citi's board to award cash bonuses to its executives, led by chief executive Vikram Pandit, and Mr Rubin, a former US Treasury secretary. Under the deal, the government has to approve Citi's executive compensation plan, including bonuses and long-term awards. People familiar with the situation warned no formal decision on bonuses would be taken until January, but added that Citi's executives had to make a significant gesture to defuse criticism.
Rising dissent among employees - many of whom face lay-offs - has also weighed on Citi's deliberations. Citi declined to comment yesterday.
Citi shares have lost 75 per cent of their value since January as the company reported billions of dollars in writedowns and credit losses and laid off thousands of employees.
A fortnight ago, Goldman Sachs became the first US bank to announce its executives had waived their 2008 bonuses. Rivals such as Morgan Stanley are widely expected to follow suit.
Citi's position on executive compensation has been closely watched because last year neither Mr Pandit, who became chief executive in December, nor Mr Rubin received bonuses. Mr Rubin has earned about $115m in compensation since joining Citi in 1999 as chairman of the executive committee. He lost that title earlier this year when the committee was scrapped but remains an influential voice in Citi's boardroom.
Despite having no operational responsibilities, Mr Rubin was instrumental in both Chuck Prince's appointment as chief executive in 2003, and his departure and replacement with Mr Pandit last year. Mr Rubin's pivotal role has exposed him to criticism from external observers and employees.
Mr Rubin declined to comment yesterday but in recent interviews he defended his conduct and said a financial crisis of this magnitude could not have been predicted.
Under Citi's executive compensation plan, bonuses can only be paid if the company's annual return on equity is more than 10 per cent. Citi is likely to miss that target this year.
Separately, people familiar with the situation said Citi was making progress on a new compensation plan for top managers in its investment banking and securities division. Under the plan, first revealed by the Financial Times in October, a large portion of these bonuses will depend on how well they interact with colleagues during meetings of the division's management committee.