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Citigroup To Spend $10 Million For Executive Suite

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Bloomberg News

Published: March 20, 2009

Citigroup Inc. plans to spend about $10 million on new offices for Chief Executive Officer Vikram Pandit and his lieutenants, after the U.S. government injected $45 billion of cash into the bank.

Affidavits filed with New York's Department of Buildings show Citigroup expects to pay at least $3.2 million for basic construction such as wall removal, plumbing and fire safety. By the time architects fees and expenses such as furniture are added, the tally for the offices at the banks Park Avenue headquarters will be at least three times as high, according to a person familiar with the project who declined to be identified because he is not authorized to comment. Citigroup said the project will help it save money over time.

Pandit, criticized by lawmakers over Citigroup's use of U.S. bailout capital, canceled an order for a company jet in January and told Congress on Feb. 11 that, "I get the new reality and I'll make sure Citi gets it as well."

Of the biggest U.S. banks that received federal aid, only Citigroup has turned to the government three times for rescue. The company, once the biggest U.S. bank by assets and market value, has agreed to limit perks and restrict executive pay.

Citigroup said in a statement that the construction is part of a global space-saving initiative. The bank plans to reduce its office space worldwide by more than 10 million square feet to help save $15 billion over the next few years, according to a company official who declined to be identified. Pandit has already slashed Citigroup's dividend and sold units to free up capital. He said in November that he would cut 52,000 jobs, about 15 percent of the firm's headcount as of Sept. 30.

"Senior executives in our corporate headquarters are moving from two floors to smaller, simpler offices on a single floor," the company's statement said.

Citigroup began planning the renovation in June and obtained demolition permits in September, before the bank received any bailout funds, said a person briefed on the process.

Some city approvals for the project were not issued until after Citigroup got its first $25 billion from the government in October, under the Troubled Asset Relief Program, according to records available at the New York Department of Buildings.

The new executive suite will be located on the second floor of Citigroups office on 399 Park Avenue, a floor below the one Pandit, 52, inherited when he took over as CEO from Charles "Chuck" Prince in December 2007. The second floor previously contained offices, which are being demolished, as well as boardrooms and executive-dining quarters.

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