Digest

BANKING

Occidental to buy Citi's Phibro unit

Citigroup has avoided a potential compensation firestorm by reaching a deal with the head of its commodities unit, Phibro, and agreeing to sell it to Occidental Petroleum, according to people familiar with the matter.

The sale, announced Friday, comes as the Obama administration's master of special compensation, Kenneth R. Feinberg, is making the final decisions on how much compensation should be paid to the top 25 earners at seven companies that have received large amounts of government bailout money.

The proposed compensation plan initially submitted to Feinberg in August for Andrew Hall, Phibro's star trader, included a $100 million bonus. As public criticism mounted over the payout, Citigroup and Hall reached an agreement that he would defer the bonus until 2010, according to a person familiar with the matter.

While Feinberg will still rule on Hall's pay plan for 2009, it no longer includes the hefty bonus.

Citigroup, which has received $45 billion in taxpayer bailout funds, said in a statement that "certain executives of Phibro have agreed with Citi that their compensation for 2009 will be deferred and reinvested into Phibro and will be paid out in future years." Occidental spokesman Richard Klein said it would acquire Phibro for the difference between the net assets and net liabilities of Phibro on the day the sale closes, or an estimated $250 million. The sale is expected to close in this year.

When asked if the liabilities included Hall's bonus, Klein said, "it will include the liabilities that are on the books at closing, whatever that is." Though Feinberg technically does not have control over Hall's 2009 bonus, which was based on a previously approved contract, it could have ignited a public and political uproar akin to the fallout earlier this year over American International Group bonuses.

-- Tomoeh Murakami Tse

Icahn offers CIT a $6 billion loan

In another sign that CIT Group is struggling to restructure its debt, the billionaire investor Carl C. Icahn offered the small-business lender a $6 billion lifeline.

In a letter to CIT's board of directors, Icahn said the loan could replace a debt-restructuring plan that CIT has asked bondholders to approve.