BP May Name Citigroup to Lead $20 Billion Oil-Spill Claims Fund
BP Plc may appoint Citigroup Inc. to lead the $20 billion fund to aid victims of the Gulf of Mexico oil spill, four people with knowledge of the matter said.
Citigroup, the third-biggest U.S. lender by assets, probably will share a portion of the duties with another bank in the Gulf region, said one of the people, who declined to be identified because the decision isn’t final yet.
BP Chairman Carl-Henric Svanberg agreed in June to create the fund after meeting at the White House with President Barack Obama. In a statement at the time, the White House said an escrow account would “provide assurance to the public that funds will be available to compensate the injured.”
BP has a longstanding relationship with the New York-based bank, whose transaction-services division specializes in cash- management for multinational corporations, the people said. Robert Wine, a spokesman for London-based BP, declined to comment, as did Citigroup’s Danielle Romero-Apsilos.
U.S. Senator David Vitter, a Louisiana Republican, on July 16 urged BP America Inc. to choose Louisiana banks for the escrow instead of “Wall Street banks,” according to a letter made public by the senator’s office.
A similar letter was sent to Associate U.S. Attorney General Thomas Perrelli, who is helping oversee BP’s response at the U.S. Justice Department. A call to Perrelli was referred to department spokeswoman Hannah August, who declined to comment.
Multiple Bidders
Prodded by the White House, BP solicited proposals from multiple banks vying to host the escrow account for the Gulf Coast Claims Facility, as the fund is known, according to two people briefed on the matter. The White House wanted to insulate the fund from any criticism that the selection might have been influenced by the U.S. stake in Citigroup, one of the people said.
White House spokesman Ben LaBolt said the decision was made by BP and that the Obama administration didn’t participate.
Citigroup, which got a $45 billion bailout in 2008, is still 18 percent owned by the Treasury Department after repaying $20 billion of the money in December.
Kenneth Feinberg, the Washington-based lawyer who served as the U.S. Treasury Department’s paymaster for bailed-out banks and administered the September 11 Victim Compensation Fund, was appointed jointly by BP and the White House to serve as the independent claims administrator for the BP fund. Feinberg didn’t return a call for comment.
To contact the reporters on this story: Bradley Keoun in New York at bkeoun@bloomberg.net; Robert Schmidt in Washington at rschmidt5@bloomberg.net.
Citigroup, the third-biggest U.S. lender by assets, probably will share a portion of the duties with another bank in the Gulf region, said one of the people, who declined to be identified because the decision isn’t final yet.
BP Chairman Carl-Henric Svanberg agreed in June to create the fund after meeting at the White House with President Barack Obama. In a statement at the time, the White House said an escrow account would “provide assurance to the public that funds will be available to compensate the injured.”
BP has a longstanding relationship with the New York-based bank, whose transaction-services division specializes in cash- management for multinational corporations, the people said. Robert Wine, a spokesman for London-based BP, declined to comment, as did Citigroup’s Danielle Romero-Apsilos.
U.S. Senator David Vitter, a Louisiana Republican, on July 16 urged BP America Inc. to choose Louisiana banks for the escrow instead of “Wall Street banks,” according to a letter made public by the senator’s office.
A similar letter was sent to Associate U.S. Attorney General Thomas Perrelli, who is helping oversee BP’s response at the U.S. Justice Department. A call to Perrelli was referred to department spokeswoman Hannah August, who declined to comment.
Multiple Bidders
Prodded by the White House, BP solicited proposals from multiple banks vying to host the escrow account for the Gulf Coast Claims Facility, as the fund is known, according to two people briefed on the matter. The White House wanted to insulate the fund from any criticism that the selection might have been influenced by the U.S. stake in Citigroup, one of the people said.
White House spokesman Ben LaBolt said the decision was made by BP and that the Obama administration didn’t participate.
Citigroup, which got a $45 billion bailout in 2008, is still 18 percent owned by the Treasury Department after repaying $20 billion of the money in December.
Kenneth Feinberg, the Washington-based lawyer who served as the U.S. Treasury Department’s paymaster for bailed-out banks and administered the September 11 Victim Compensation Fund, was appointed jointly by BP and the White House to serve as the independent claims administrator for the BP fund. Feinberg didn’t return a call for comment.
To contact the reporters on this story: Bradley Keoun in New York at bkeoun@bloomberg.net; Robert Schmidt in Washington at rschmidt5@bloomberg.net.
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