Bank examiners wearing black suits and white shirts have already been to the Citigroup (C) headquarters in Manhattan to tell CEO Vikram Pandit how badly his company did on recent stress tests performed by the government on America’s 19 largest banks. Pandit and his staff have fought the conclusions, but in a fight with the government, the government wins.

Pandit has to raise money to build up Citi’s balance sheet and it looked like the only way to do that was to take more money from the federal government, losing more and more control over its own fate.

But, a Japanese financial firm may have helped Citi get back into the game of besting the government on the issue of its financial health.

According to several news report, Citigroup is selling its Japanese securities business to Sumitomo Mitusi Banking Corp. in a transaction worth $7.9 billion in cash.  MarketWatch writes, “Citi said it expects to generate around $2.5 billion of tangible common equity from the sale.”

The transaction is a godsend for Citigroup and may be the first in a number of transactions that keeps the government from requiring the bank to sell more stock or offer more preferred to outside investors. Citi still have a number of attractive divisions and its new board may push Pandit to sell some of them as an alternative to going to the capital markets, or worse, the government.

Pandit may have found a way to keep his job by auctioning off the bank’s crown jewels.

Douglas A. McIntyre

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