Oct. 24 (Bloomberg) -- Citigroup Inc. is close to an agreement to consolidate its New York operations in a Tribeca office complex majority-owned by SL Green Realty Corp., according to three people with knowledge of the talks.
The third-biggest U.S. bank had narrowed its choices down to the yet-to-be-built 2 World Trade Center or 388 and 390 Greenwich St., two buildings it sold to SL Green in 2007 and leased back, said two of the people, who asked not to be identified because the talks are private. Citigroup executives decided last week they would continue negotiating with only SL Green, the people said.
As part of its decision, Citigroup may vacate 111 Wall St., a 25-story tower near the East River that was damaged by Hurricane Sandy, one of the people said. The bank leases the building, according to New York City property records. Citigroup also may move some employees to the Tribeca complex from 399 Park Ave., its headquarters, and 601 Lexington Ave., the skyscraper formerly known as Citigroup Center, the person said.
Other financial giants have reduced their presence in the city, an office market they’ve long dominated. JPMorgan Chase & Co. last week agreed to sell 1 Chase Manhattan Plaza, once the headquarters of Chase Manhattan Bank, and Bank of America Corp. has moved out of most of the downtown offices that were once Merrill Lynch & Co.’s headquarters. UBS AG is moving out of most of the space it rents at 299 Park Ave.
Heidi Gillette, an SL Green spokeswoman, declined to comment on its discussions with the bank. Shannon Bell, a Citigroup spokeswoman, and Dara McQuillan, a spokesman for Silverstein Properties Inc., which holds the lease on the 2 World Trade Center site, also said they wouldn’t comment.
Citigroup executives determined that increasing its presence at 388 and 390 Greenwich was its most cost-efficient option, said one of the people with knowledge of the talks.
Wall Street’s biggest banks, including JPMorgan and Citigroup, are trying to cut costs to counter weaker revenue and mounting legal expenses. JPMorgan, the biggest U.S. bank by assets, reported its first quarterly loss under Chief Executive Officer Jamie Dimon earlier this month after taking a $7.2 billion charge to cover the cost of litigation and regulatory probes.
Citigroup CEO Michael Corbat is eliminating jobs, closing branches and scaling back in some countries to counter weaker revenue from bond trading and a drop in mortgage refinancings.
“While many of the factors which influence our revenues are not within our full control, we certainly can control our costs,” Corbat said in a statement when the bank reported earnings on Oct. 15. “I am pleased with our expense discipline and improved efficiency year-to-date.”
Citigroup’s current lease on its offices at 388 and 390 Greenwich runs until 2020, said one of people with knowledge of the talks. The buildings house its trading operations. SL Green co-owns the complex with Ivanhoe Cambridge, the real estate unit of Caisse de Depot et Placement du Quebec.
The bank sold 388 and 390 Greenwich to SL Green and its partner for $1.58 billion in December 2007, according to data from Real Capital Analytics Inc., a commercial-property research firm. Citigroup had acquired the property -- a 40-story tower and a connected 10-story building -- when it merged with insurer Travelers Group in 1998. The buildings had been the Travelers headquarters.
Citigroup’s discussions with SL Green were reported yesterday by the Wall Street Journal.
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