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Citi to sell US$400b in assets

Citi to sell US$400b in assets

(12 May 2008 – USA) Citigroup has announced intentions to sell off more than A$430 billion in assets following the poor performance of the bank in the current credit crisis. Vikram Pandit, chief executive office, Citigroup, has announced the plans to shed US$400 billion (A$430.4 billion) is assets.

He said that he would slim the group down into a more manageable entity by selling many of the assets on its balance sheet and some of peripheral units.

The asset sales will happen over the next few years and will total around 22 percent of the current asset base. It will include assets such as mortgages, bonds and other debt obligations, as well as some non-core Citigroup units.

He said, however, that the bank won’t be split, and will instead stick to the global, universal bank model due to the vast network of relationships that the bank considered was unrivalled in the financial services industry.

The driver behind the changes is $US15 billion of reengineering benefits in the next three years. This will be done mostly through the cost cuts that will result from consolidating the businesses.

This includes integrating the disparate businesses that at present employ 140,000 IT and operational people scattered across the group, use 16 database standards and 33 client management systems.

Pandit said that the range of business units will stay, pointing to the focus on emerging markets as the key to future focus. He said that capital markets are much less developed in emerging markets, so a bank needs deposits for funding.

He added that it makes complete sense to have a retail and investment bank together.
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