Banking, finance, and taxes
Citigroup (C) Sells German Unit: The Dismantling Of Sandy Weill's Mansion
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Shareholders at Citigroup (C) have been begging new management to auction off as much of the bank as the new CEO can find. They reckon that is the only way to get the share price up. It currently trades near a multi-year low. There has even been mention that Smith Barney should be put on the auction block.
Overnight, Citi gave in a bit to what its stockholders want. It sold its German retail bank operations to French financial firm Credit Mutuel. The US company will walk away with $7.7 billion.
Although the cash may only be enough to cover Citi’s Q2 losses, it means that shareholders will probably not have to be diluted further.
The question now is whether the bank can stay one step ahead of the sheriff by continuing to sell-off assets. Some experts think Citi could loss money for several more quarters. Better to raise the money through the sales of bits and parts than to get it from sovereign funds at below market prices.
Sandy Weill’s ideas of a global financial supermarket may never have been a good one. Now its does not matter. Citi can’t afford to hold it together. If the bank is lucky, it will get to keep half of what the old empire builder created.
Douglas A. McIntyre
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