If the media reports are to be believed then, Citigroup Inc. is getting rid of one of its Phibro commodities trading division, which is one of the irritants in its relationship with the government, and is paying one trader an estimated $100 million this year.

Friday, the deal was announced and it carries a tradeoff for Citigroup. Apart from implying lesser government scrutiny, the 250-million sale to Occidental Petroleum Corp. also indicates that the bank is losing hundreds of millions of dollars in annual income that could help repay $49 billion in bailout money.

During the past five years, an average $371 million annually was earned by Phibro, which makes most of its money through oil and natural gas trades. It was sold by Citigroup for nearly $250 million, which means Occidental could get back its investment in less than a year.

An official from Citigroup, who wanted to stay anonymous for security reasons, said that the banks intended to dispose off Phibro by the end of the year. She added that Citigroup saw Phibro as a "political hot potato", which would harm the company in spite of its financial success.

It was a month ago when Citigroup approached Occidental, with the aim of finding a buyer for Phibro.

"There obviously was some pressure from the government to do. If they had liquidated the business, they would get about what we're paying," said Occidental Petroleum spokesman Richard S. Kline.

Since Citigroup has bigger problems with losses from failed loans, the income lost to the Phibro sale will have little effect on Citigroup's earnings.

Gerard Cassidy, a banking analyst with RBC Capital Markets, said: "They're going to miss those earnings. But the credit losses are much larger and will have a much bigger impact."

Presently, the government owns a 34 percent stake in Citigroup, putting the bank under a close watch of federal officials. It was after the company agreed to pay Phibro trader Andrew J. Hall an estimated $100 million that it came under further inspection.

Now, Occidental will be responsible for Hall's pay. As of now, there is no confirmation whether the Obama administration's pay czar, Kenneth Feinberg, will continue to review Hall's pay package, following the Phibro sale to Occidental.