The Epic Of The Fall - Citi To Sell, Spin Off Or Put $400bn Or More In "Run-Off" Mode

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Citi To Sell, Spin Off Or Put $400bn Or More In "Run-Off" Mode

Citi To Sell, Spin Off Or Put $400bn Or More In "Run-Off" Mode	May. 9th, 2008 @ 09:16 am

Citigroup considers $400bn asset sale
By Francesco Guerrera in New York

Published: May 9 2008 00:41 | Last updated: May 9 2008 00:41

Citigroup will on Friday identify as much as $400bn in non-core assets that could be sold as part of plans to reduce costs and restore profit growth to double-digit rates, according to people close to the situation.

At a long-awaited meeting with Wall Street analysts, Vikram Pandit, Citi’s chief executive, also plans to confirm his pledge, first disclosed in the Financial Times, to cut Citi’s cost base of over $60bn by about 20 per cent.

Mr Pandit is likely to say that about 20 per cent of Citi’s $2,000bn-plus balance sheet consists of “legacy” assets – entire businesses or trading positions outside its core businesses in commercial, consumer and investment banking.

The sale of the assets is likely to take years, and some of the non-core holdings may never be sold, according to people close to the situation. Nevertheless, Mr Pandit’s decision to classify such a large portion of the balance sheet as non-core highlights his determination to root out underperforming businesses.

Under Mr Pandit, who took over in December after the departure of Chuck Prince and other top executives, Citi has sold several peripheral units, including its leasing business and its Diners Club charge card network. It has been reported to be looking at the sale of Primerica, a seller of life insurance and investments.

Analysts have speculated that Citi could sell its retail banking operations in Germany and Brazil, as well as some businesses and equity stakes in Asia.

Citi declined to comment on the analysts’ meeting. People close to the situation said the plans to be announced by Mr Pandit had not been finalised and could change.

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