The possibility is one of many options that Citigroup is considering after it had mulled a sale of Phibro to Warren Buffett's Berkshire Hathaway Inc
Citigroup and Berkshire did not immediately return calls seeking comment. A bank spokeswoman told the newspaper: We are evaluating the best way forward for stakeholders.
The newspaper said Citigroup may decide to transform Phibro into a partnership led by Hall, turning the bank into a limited partner with a smaller share of the profits, and requiring the bank to find new investors in that business.
Other options include asking Hall and other traders to work without contracts, replacing Phibro's leadership, or winding down the unit, the newspaper said.
These options could backfire given that Phibro has provided Citigroup with considerable recent profits, and that much of Phibro's worth is thought to derive from Hall's abilities and continued presence.
Citigroup is trying to shed troubled assets after huge losses resulted in the government giving the bank $45 billion of taxpayer funds and taking a 34 percent equity stake.
Known for owning a castle in Germany and for his collection of expensive art, Hall runs Phibro in Westport, Connecticut.
His pay has gotten caught up in a political spectacle over how much companies accepting taxpayer money should be allowed to pay their top workers, including those whose compensation is contractually required.
If the companies were to pay too little, the argument goes, top workers could flee to rivals not bound by pay limits, hurting the companies and thus taxpayers' investments.
Next week, the government pay czar, Kenneth Feinberg, is expected to start reviewing compensation structures at several companies that received bailouts.
These companies are Citigroup, American International Group Inc
(Reporting by Jonathan Stempel; Editing by Gary Hill)