Citi dodges a pay row with sale of Phibro

US BANK Citigroup has avoided a pay row with regulators with the sale of its&nbsp; Phibro commodities trading unit, where star performer Andrew Hall works. <br /><br />Hall, who earned a $98m (&pound;62m) bonus last year, is on course for a performance-related award of more than $100m this year, sparking anger among US taxpayers, who financed the $45bn bailout of the bank.<br /><br />But Citi will avoid accusations that it is using public money to hand out excessive pay packets, after announcing the sale of Phibro to Occidental Petroleum for around $250m.<br /><br />Hall was due to pick up a bonus of more than $100m after another stellar year for Phibro, which has delivered average annual profits of $371m to the struggling banking group over the past five years.<br /><br />But the sale will remove Hall&rsquo;s bonus from a long list of problems facing the bank.<br /><br />Citigroup said yesterday that the motivation for the sale was purely to fit in with chief executive Vikram Pandit&rsquo;s efforts to shed non-core units, saying that sale was &ldquo;consistent with Citi&rsquo;s core strategy of a client-centred business model&rdquo;.<br /><br />But London-born Hall is understood to have advocated the sale, after abandoning a plan which would have seen him leading a management buyout of Phibro. <br /><br />Phibro&rsquo;s management team, headed by&nbsp; Hall, and its employees will remain with the company after closing the deal.<br /><br />The bank was on a collision course with President Obama&rsquo;s pay tsar Kenneth Feinberg over Hall&rsquo;s expected payout.<br /><br />Feinberg is currently reviewing the remuneration plans of seven firms deemed to have been in receipt of &ldquo;exceptional&rdquo; state support and is due to reveal his plans for pay structures at the institutions within days.<br /><br />However, Feinberg&rsquo;s ability to intervene in Hall&rsquo;s pay could be restricted by the fact that he is contractually entitled to the award under remuneration policies drawn up before the&nbsp; government deadline set for the pay tsar&rsquo;s jurisdiction.<br /><br />Even Pandit conceded that Hall&rsquo;s likely bonus payout seemed excessive during a speech to bankers in New York last month.<br /><br /><strong>ANDREW HALL<br />HEAD OF PHIBRO</strong><br />Andrew Hall, a US citizen born in the UK, has been the focus of much high-profile comment over an expected bonus of more than $100m this year, becoming the poster child for excessive Wall Street wages as Americans voiced their anger at the banking community&rsquo;s role in the financial crisis.<br /><br />Hall took home more than $98m in 2008 after correctly predicting that the price of oil would rise to more than $147 a barrel. <br /><br />The trader, who heads Citigroup&rsquo;s oil and gas trading unit Phibro, is in line for an even bigger payout this year, adding to a personal fortune that Hall has used, among other pursuits, to add to his collection of modern art.<br /><br />Oxford-educated Hall, 58, is a keen modern art enthusiast and owns works by names such as Andy Warhol, Julian Schnabel and Bruce Nauman, many of which hang in his 1000-year-old castle near Hamburg, Germany called Schloss Dernberg.<br /><br />The trader, famed for his eagle eye for a deal, is known to head out of the office in the afternoon to go rowing or practice callisthenics.<br /><br />The chemistry graduate joined energy giant BP as a trader in its US arm, from where he was snapped up by Phibro, rising to run the Citigroup division by 1987.<br /><br />He is understood to have got behind the banking group&rsquo;s decision to sell off Phibro after giving up on a plan to lead a buyout of the company.<br /><br />Citigroup chief executive Vikram Pandit is understood to be reluctant to part with his star trader. However, one benefit is the sale of Phibro will avoid a potentially protracted row with USregulators over his pay.