Citi, the

US bank, is closing a $400 million convertible arbitrage fund, the final step in winding down its $2 billion Tribeca Global Investments group, people familiar with the plans told Bloomberg.

Tribeca Convertible is being shut after investor redemptions, according to the people, who declined to be identified because the decision is not public.

The closing marks the end of Tribeca Global, set up in 2004 with a goal of attracting as much as $20 billion. It comes as Citi struggles with its alternative-asset management unit, most recently closing Old Lane Partners, the hedge fund that the bank’s chief executive, Vikram Pandit, co-founded and sold to the bank last year. In March, Citi started shutting down its Falcon Strategies hedge funds after suspending redemptions.

Convertible arbitrage funds typically buy bonds while betting that the same issuer's common stock will drop.

Citi said last September it was closing Tribeca Global Investments and returning money to clients. About $400 million in convertible and Asian securities would remain invested within Citigroup Alternatives, the bank said at the time.

Tribeca Convertible was down less than 5 per cent this year, people familiar with the fund said. That compares with a 6.7 per cent decline in the Fixed Income-Convertible Arbitrage Index, according to Hedge Fund Research. The fund rose by 20 per cent in 2006 and 5 per cent in 2007.