Citigroup plans to spend more than £1bn on refurbishment of its Canary Wharf towers, underscoring the huge cost of upgrading aging skyscrapers as banks try to push staff back into offices.
The US bank launched the revamp of the 42-storey building at 25 Canada Place in 2022, with reports at the time that it would cost more than £100 million.
However, people familiar with the project say that figure was never realistic, with costs expected to exceed £1bn. Another person familiar with the project said the £100m figure was inaccurate and had never been publicly confirmed by Citi.
The cost of revamping the nearly 25-year-old skyscraper will be close to the £1.2bn Citigroup paid for the tower in 2019 as part of a strategy to own rather than lease its office space.
The project, expected to be completed in 2026, marks a major investment by Citigroup to improve the quality of London's workspaces as the bank persuades reluctant staff to return to offices.
But at the same time, Citigroup is undergoing a turnaround under Chief Executive Jane Fraser, who faces pressure to cut expenses and improve the bank's profitability.
The price also highlights the eye-popping cost of breathing life into aging skyscrapers at a time when many towers in Canary Wharf and other centers around the world are in need of major repairs.
Docklands landlord Canary Wharf Group (CWG), on behalf of the building's owner, Qatar Investment Authority, plans to overhaul the HSBC Tower when the bank leaves in 2027.
The building occupied by Clifford Chance is also likely to undergo refurbishment after the firm's lease expires in 2028.
Citigroup's ambitious design for its project included perforating floors and adding new stairs to create multi-level "villages" for different teams.
There will be a three-storey "winter garden" at the center of the tower, with further gardens in the customer entertainment space at the top. Extensive work will also be done to update mechanical systems and the facade.
Citibank considered demolishing and rebuilding the tower before launching the project, but ultimately decided to go ahead with the renovation because repurposing the existing structure was more sustainable, albeit at a much higher cost.
The purchase of the César Pelli-designed tower built for the bank in Canary Wharf is one of the most expensive property sales ever in the UK. CWG has reduced the value of its office portfolio by 26% since 2019, the company reported.
Morgan Stanley is also about to start renovations at its Canary Wharf building, but will receive a £150m fee from the CWG as part of an agreement to extend its lease for 10 years.
The JPMorgan Chase Tower, acquired after the collapse of Lehman Brothers, will also be renovated.
Citi declined to comment.