Citi May Part Ways With Castle-Owning Trader

Citigroup doesn’t want Andrew Hall to go. The castle-owning commodities trader is the one trader they truly love! Or rather, the one trader that truly makes them money. But the fear of public anger over the $100 million bonus the bank is contractually obligated to pay Hall — and, frankly, the need for some cold hard cash — is forcing the bank to consider letting go of his Connecticut-based energy-trading unit, Phibro.

From the FT.

People close to the situation said that, after debating options such as divesting part of the unit, called Phibro, opening it up to outside investors or spinning it off, Citi’s executives favoured a complete divestment of the commodity trading division. Citi has held talks with potential buyers but no deal is imminent and the plan to sell Phibro, which has been one of the bank’s most profitable businesses, could still collapse, insiders warned. Should a deal fail to materialise, Citi is still considering selling a majority stake in Phibro while retaining a minority interest for a few years.

This is all well and good, and we’re glad they’re taking taxpayers feelings and our personal suggestions seriously, but one really startlingly obvious question seems to be going unanswered: Will any of these options mean that Citigroup will not have to pay Andrew Hall a performance bonus for year 2008? We’re thinking no, because they are contractually obligated to dole out that dosh. Parting ways with the unit will allow them to make up some of the cash they lose to him, but they’re still paying it, either way, and ultimately, the loss of a star trader might cost them a lot more. These are the questions that keep Kenneth Feinberg up at night, we’re sure. Well, that and, “Should I just shave off the sides?”

Citi eyes commodities unit sell-off [FT]
Earlier: Andrew Hall Has Castle, Needs Bonus

Citi May Part Ways With Castle-Owning Trader