Citigroup

💰 The Fee Machine

SPAC underwriting fees follow a unique 5.5% structure: 2% paid at IPO, 3.5% deferred until merger completion. For Citigroup, that meant an estimated $1800M in total fees from SPAC activity.

The deferred fee structure was designed to align bank and investor interests — banks would only get their full fee if a deal closed. But in practice, this created perverse incentives: banks pushed marginal deals to close rather than walk away from deferred fees.

When the SPAC market collapsed, several banks including Citigroup (in 2022) walked away from billions in deferred fees — but kept everything they'd earned upfront.