Citigroup Inc. has been pulling out all the stops to end its bleeding. It sold some real estate, received multibillion-dollar capital infusions from foreign investors, slashed its dividend, proposed a massive corporate restructuring including the hiring of a new CEO, but still there seems to be no light at the end of its tunnel. Oppenheimer & Co. analyst Meredith Whitney said Monday that if things don't turn around it might be forced to sell the crown jewel of its holdings -- Smith Barney Inc. -- to have enough capital to endure its massive credit problem.
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"I don't know they are yet in a position where they have to sell that, but I think they will be over the course of the next year, " Whitney said on Bloomberg television. If that happens, the sale would be another nail in the coffin for Citi's financial supermarket formula devised by former CEO Sandy Weill over the last two decades. Some say Smith Barney, which has 9.3 million client accounts representing almost $1.6 trillion in assets, could reportedly fetch upwards of $25 billion, but in this economy that seems unlikely.
While some industry observers feel that a sale of Smith Barney would never occur, stranger things have happened. After all, News Corp. succesfully fractured the Bancroft family and bought Dow Jones & Co. -- an idea a year earlier that would have seemed absurd. - Gerald Magpily
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