New York: Citigroup has decided to close a hedge fund that its chief executive Vikram Pandit co-founded, and which the banking behemoth bought for more than $800 million.

Citigroup plans to shut Old Lane Partners and buy what is left of its assets, the Wall Street Journal reported Thursday. The fund has been dogged by mediocre returns and the loss of top managers.

Pandit personally made at least $165 million when Citigroup bought Old Lane at a time when hedge funds were considered a lucrative new business.

But when Old Lane started struggling, Citigroup had a choice of pumping new money into it or shutting it down, creating an awkward situation for Pandit who took over as chief executive last December.

Pandit removed himself from the deliberations to avoid the perception of a conflict of interest.

Citigroup officials considered replenishing Old Lane with $1 billion to $3 billion of the bank's own capital. Old Lane chief executive Guru Ramakrishnan, in a memo last month to trading partners and lenders, said the fund had secured a "substantial" amount of fresh capital, the Wall Street Journal said.