NEW YORK (
is leaning toward selling its commodities unit Phibro to raise money and deflect political anger over a potential $100 million payout to Phibro's star trader Andrew Hall.
The decision by the bank to completely divest itself of the division followed debates on whether it should divest just part of the unit, open it up to outside investors or spin it off, the
Citigroup has held talks with potential buyers but no deal is imminent and the plan to sell the unit, one of its most profitable, could still collapse, the newspaper reports. Should a deal fail to materialize, Citigroup is still considering selling a majority stake in Phibro while retaining a minority interest for a few years.
While a sale of Phibro would give the bank a large one-off windfall it would deprive the company from a profit engine that has contributed an estimated $2 billion to its bottom line in the past five years.
The eagerness to stop the compensation controversy is one of the major reasons why Citigroup's management favors a sale and not the other options which would still leave the company vulnerable to criticism over Hall's pay. (Hall's contract guarantees him a bonus of about $100 million). The decision also comes at a time when the U.S. government is close to announcing its decision on
for top executives of banks that rely on federal aid, the
Citigroup, of which the U.S. government owns a 34%, told the
, "We are evaluating the best way forward for all stakeholders and are exploring several options."
This article was written by a staff member of TheStreet.com.