Rumor had it that Citigroup Inc. was going to start divesting assets as it continues to feel the pain of the credit crisis. While speculation last week surrounded its German business, it turns out the latest
to go is apparently benefits service unit CitiStreet LLC, a joint venture with State Street Corp., which will be acquired by Dutch insurer, ING Groep NV for $903 million.
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For ING, the deal is expected to catapult its presence in the U.S. retirement savings market. For Citigroup, the deal provides additional capital.
Citigroup has raised more than $36 billion since November after it was forced to make about $40 billion of write-downs because of failed bets in the credit market. So which businesses could be next for Citigroup to divest? Well, as we reported earlier, Deutsche Bank AG is raising money for acquisitions, and may bid for Citigroup Deutschland.
In an interview with analyst Richard Bove of Punk, Ziegel & Co., he said, "I wouldn't be surprised if they [Citigroup] sold the retail operations, but I would be surprised if they [Citigroup] pulled out of Germany completely. Deutsche Bank is the dominant bank in Germany, and it would be natural for them because they are constantly adding retail operations just as Bank of America is doing in the U.S."
Another rumor is that Citigroup may sell its Citigroup India commercial vehicle finance business unit. And an even more outlandish rumor suggests Salomon Smith Barney could get the heave-ho.
After having already taken in massive capital infusions from sovereign wealth funds, and stand to further dilute shareholder value should Citi dare take more, certainly some of the divestiture rumors will likely come true. -Maria Woehr
See Dealscape: Another class-action lawsuit filed against Citigroup
See Dealscape: Bove interview: Citigroup may sell to Deutsche Bank
See Dealscape: Whitney's Citi prediction could be precursor to Smith Barney sale
See the full CitiStreet story from The Daily Deal
