Citigroup Spending $3M on Headquarter Renovation in NYC

Fri April 10, 2009 - Northeast Edition
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NEW YORK (AP) Citigroup is going through with more than $3 million worth of construction at its corporate headquarters in Manhattan.

The bank said the renovation will save money in the long run. Top executives currently working on two floors will be consolidated in “smaller, simpler offices on a single floor,’’ Citigroup said.

But the office makeover at the bank’s Park Avenue address comes at a tricky time for the company, which is operating with $45 billion in federal funding after recording five straight quarters of losses. The bank’s use of taxpayer dollars has been under close watch.

Consolidating real estate is a good idea, said Sanjai Bhagat, a professor of finance at the University of Colorado Leeds School of Business. And $3 million is a tiny fraction of $45 billion. But the question is whether it really takes millions of dollars to move executives from two floors to one.

“They’re still living in the pre-2008 era,’’ Bhagat said. “They still don’t get the message.’’

The bank, which has been planning the renovations for months, is paying $3.2 million for basic construction, including wall removal and fire safety systems, according to filings at the New York Department of Buildings. The total cost could end up being higher, though, after fees and other expenses — other media reports estimated the cost of the renovations at $10 million.

A person familiar with the plans said the company intends to sublet the floor that it is exiting. He spoke on condition of anonymity because the plans were not final.

Citigroup scrapped plans to buy a $45 million private jet after President Obama called the expenditure “outrageous.’’ It has faced criticism, too, from a few lawmakers over its $400 million stadium naming deal with the Mets.

In front of a House panel in February, CEO Vikram Pandit said: “Let me be clear to the committee: I get the new reality.’’