Andrew Hall, the Citigroup energy trader who may or may not get his $100 million pay day, wants out of Citi (C).
According to NYT, the head of the Phibro unit is looking for a “quiet divorce” from his beleagured parent.
He’s already had talks with one other suitor, though it’s not clear how that would solve the current conundrum — whether or not the pay czar will allow Citi to pay him the money he is owed now.
Perhaps they’ll be able to find a loophole whereby an outside buyer will pay Citigroup for Phibro, subtracting out some monster signing bonus that they’ll pay to Hall (his castle pictured here). That could work.
Some will be up in arms that we’re encouraging a TARP bank that needs all the money it can get to shed one of its most consistently profitable divisions. But on this we have to agree with Felix Salmon, who suggests that grafting a hedge fund on top of Citi is a poor idea, particularly in light of the AIGFP fiasco.
Sure, it may be structured differently, and maybe a Phibro blowup wouldn’t pose a risk to the broader Citigroup or to the system at a whole. But do we trust regulators to recognise the difference between a safely-attached hedge fund, and one that poses a risk to the parent? Probably not.
Our focus should not be on saving Citigroup, and making it profitable, it should be on slimming it down and eliminating the ongoing risk that this bank creates, merely by being in existence.
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