Citigroup (C) got a cash infusion of $7.5 billion from the investment arm of the Abu Dhabi government which seems to be taking a piece of every business in the world including local car dealers. Even with the money going into the big bank, there are calls to break Citi into pieces.

There are ways for the bank to improves its financial position short of breaking into several operations. The company has a dividend of $2.15 and 4.98 billion shares outstanding. No one likes to see the dividend cut, but that is a lot of money.

One analysts says that Citi is worth $56 if broken into parts. Thomas Brown of Bankstocks wrote back in 2005 that Citi could be cut into four parts. The first would be the North American consumer bank. Next would be the company’s investment bank followed by its international consumer bank and Smith Barney. The analysis is old, and its also does not take into account all of the damaged assets on the books at Citi.

Citi trades at $30 and may not be worth more than that in pieces. E*Trade (ETFC) has been trying to sell itself. Its valuable asset, its consumer brokerage accounts, may be worth over $5 billion. But, its bank business has an undetermined amount of mortgage-related securities exposure. So, money that comes into E*Trade from an acquirer might never make it to common shareholders. It could be used to bail out the banking unit.

Citi has a related problem. If its sells its retail brokerage unit, how much of that money should go to the piece of the bank with failing assets? The same holds true for the sale of spin-out of any division. Regulators are not going to allow all of the good businesses to walk away and leave one unit that has a negative value of tens of billions of dollars.

Wise up. Citi can’t be broken up.

Douglas A. McIntyre

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