Recently the Citigroup sold its commodities trading unit, Phibro to Occidental Petroleum for a paltry sum of $250 mn. This sum is certainly paltry vis-a-vis Phibro's average annual profit of $371 mn. in the last 5 years. How did this transaction take place and how did Citigroup's CEO, Vikram Pandit justify this to his Board?
Phibro's talented (or plain lucky?) trader Andrew Hall was entitled to a bonus of $100 mn. for his last year's performance. Citigroup could not renege on its agreement nor could it give away the bonus without displeasing its 34% owner i.e. the US Treasury. "Risk mitigation" is the ostensible reason given for divestment of Phibro.
Such skewed transactions are an unintended consequence of state funding for private banks in the aftermath of financial crisis.