Citigroup Inc. today announced that it plans to restructure Old Lane Partners, and its multi-strategy hedge fund, in anticipation of redemptions by all unaffiliated, non-Citi employee investors.

In the first quarter, following the promotion of key Old Lane executives to other positions at Citi, Old Lane notified investors in its multi-strategy hedge fund that they would have the opportunity to redeem their investments in the fund, without restriction, effective July 31. As a result, Citi will purchase substantially all of the assets of the multi-strategy hedge fund at fair value, which will enable Old Lane to facilitate client redemptions at July 31.

All former Old Lane individual partners, including Vikram Pandit and other senior Citi executives will be required to maintain their investments in Old Lane funds or other designated funds.

As part of the restructuring, certain Old Lane strategies — convertible equities, credit fixed income, and structured credits — will be integrated into the proprietary activities of Citi’s Securities and Banking business. Old Lane will establish a number of single-strategy funds with future offerings designed to meet client demand as part of the Citi Alternative Investments platform.

“These steps will maximize the synergies and talent that are housed within Old Lane and are consistent with Citi’s continuing effort to optimize resources, both within the Institutional Clients Group (ICG) and across Citi,” said Ned Kelly, president and CEO of CAI. “As such, our hedge fund offerings are important to our success and we must focus our resources and shape our organization accordingly.”

The estimated second quarter 2008 financial impact from Old Lane’s restructuring is an increase in Citi’s GAAP assets of approximately US$9 billion. In addition, on a pro forma basis, the company’s Tier 1 capital ratio of 7.74% would have declined by approximately four basis points, to approximately 7.70%.