Citi is reportedly in talks to sell Phibro – an in house hedge fund unit – in a move that would quell the outrage at trader Andrew Hall’s $100 million bonus.
A spokeswoman for Citi said “As we have said previously, we are evaluating the best way forward for all stakeholders and are exploring several potential options, ” but declined to comment further.
Citi executives and government officials said there had been no pressure from the authorities to sell Phibro, according to the Financial Times. 30-four per cent of Citi is directly owned by the government, which has also extended enormous guarantees on Citi’s assets.
Last month, Citi CEO Vikram Pandit, speaking at the 92ndStY, blamed decisions made by previous managers who agreed to Hall’s contract. Hall’s bonus puts the bank in a tough decision – it needs to strike a balance between deflating public outcry at a time when the pay czar is coming down on bailed out banks, whilst having to honour Hall’s contract, whose terms are legally binding. Worse, cancelling the contract would make it difficult for Citi to attract traders from rivals and create opening for top traders to be poached.
The bank’s earnings are set to be released next Thursday.