The Citi Sale That Never Ends

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

Alle USA banken bij elkaar worden nog geacht $1400 miljard te moeten
afschrijven, voordat ze een schone lei hebben.

Citigroup doet dit op een andere manier dan de andere banken.
Het verkoopt bezittingen, die volgens insiders niet genoeg op kunnen
brengen om Citigroup weer op het juiste spoor te zetten.
Bovendien worden onderdelen verkocht die goede winstmakers zijn.

Waarom?
Het enige dat ze zo bereiken is dat zij uitmaken waar de toekomstige
winsten worden gemaakt.
Is dat het doel?

Groet / Cees

PS. De vroegere Amerikaanse ambassadeur, die zijn benoeming door Bush
mocht innemen van het Congress, NA het betalen van een boete van $350
miljoen voor zijn hypotheek praktijken, was niet de enige die door
Citigroup gefaciliteerd werd. Er waren nog zo'n stuk of 7 anderen.
Uiteraard allemaal off-balance, toen, nu moeten wel de opgelopen verliezen
worden gedekt.

http://www.time.com/time/business/article/0,8599,1929534,00.html

The Citi Sale That Never Ends: After Phibro, What's Next?

The bank that never sleeps is holding an all-night sale.

Citigroup, in an effort to improve its bottom line and repay the
government, has put a "for sale" sign on numerous pieces of its business,
downsizing what once was the nation's largest bank. Citi's executives are
taking a decidedly different tack in trying to rescue their firm than
their competitors, and some analysts question whether the downsizing alone
will be enough to turn around the bank.

"The winding down of Citi Holdings [the units Citi has said are for sale]
won't create enough gains to pay back the government," says bank analyst
Ed Narjarian of ISI Group.

 The latest indication that Citi is for sale came Friday. The bank sold
its Phibro commodities trading unit to energy and chemical giant
Occidental Petroleum. Oxy Pete will pay $250 million for the unit, which
specializes in oil and gas trading. Phibro is not a huge business for
Citigroup. But it was one of the few businesses that continued to make
money for the giant bank during the credit crisis. Phibro and Citi's
global payment processing business have long been seen as two areas where
the bank outperforms its competitors. Now one of Citi's profit jewels are
gone.

It's just the latest sale for Citi, which has been paring back its
businesses for well over a year. Earlier this year, the bank sold its
Salomon Smith Barney brokerage unit to Morgan Stanley. Also gone are
Citi's Diners Club credit card business, its Japanese brokerage
operations, a technology services unit, and some of its overseas
divisions.

And there's no signs that the big Citi sale will end anytime soon. The
bank still owes the government $45 billion from this past year's financial
rescue effort, and Citi executives said it would like to repay the
government soon. Last June, in an unusual move, Citi hired investment
banker James von Moltke for the sole job of heading the bank's corporate
disposal effort.

If that didn't make its intentions clear enough, earlier this year
Citigroup publically identified a number of businesses that it would like
to get rid of. Among those that are still left are its insurance division
Primerica and a home loan business CitiMortgage. At the time, Citi said it
would like to hold onto much of its retail and corporate bank. A Citi
spokesperson says that continues to be the bank's plan. In July, CEO
Vikram Pandit told financial news outlet Bloomberg that his bank is
"moving extremely fast" on asset sales. He said the bank had already
shrunk its assets by 25%.

But these days it looks like much more is on the block at Citi than the
bank lets on. Citi is reportedly considering a plan to either sell-off or
close a number of its retail branches. At just over 1,000, Citi has a much
smaller branch network than its rivals. Bank of America, for example, has
6,000 branches nationwide. Citi is reportedly considering closing or
selling its bank branches in cities such as Boston, Philadelphia and other
areas of the country where it does not have a significant presence. (See
pictures of the global financial crisis.)

Then there is Phibro. Based in Westport, Conn., the unit was originally
included among the businesses that Citi wanted to hang onto. And for good
reason: Phibro has been profitable every year since 1997, averaging a gain
of nearly $400 million a year for the past half decade. But earlier this
year it was revealed that the head of that unit Andrew Hall had been paid
$100 million for his work in 2008, and was set to get a similarly large
check for 2009. Citigroup is subject to government imposed pay caps as a
term of the financial aid it received. The government was reviewing Hall's
pay package and was reportedly moving closer to forcing Citi to either
reduce or restructure Hall's pay. Rather than risk losing the trader, and
the profits of the unit, Citi decided to sell.

Citi executives are taking a different path out of the financial crisis
than many of its rivals, which at times has been a benefit to those
rivals. With the acquisition of Citi's Salomon Smith Barney, Morgan
Stanley now has the largest brokerage force in the nation. And while
Morgan has gotten out of some trading businesses, it is expanding its
retail banking business. Executives at Bank of America and Wells Fargo say
there are no plans to sell off major pieces of those banks.

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