Citi said Friday that Credit Mutuel would pay cash for the unit as well as earnings accrued by the business in 2008, resulting in an after-tax gain of about $4 billion. The money would be used to boost Citi's balance sheet, which has been depleted by more than $45 billion of write-downs and credit-related losses in the past nine months.
The sale is part of a
global strategic review instigated by Citi chief executive Vikram Pandit, who told investors in May he would offload about $100 billion of noncore businesses and remove about $400 billion of low-return mark-to-market securities from its books by selling them or holding them to maturity.
Faced with its worst financial crisis in 16 years, Citi has already raised more than $40 billion of new capital and divested businesses including its
CitiStreet defined contribution business, which was sold to Dutch insurer ING Groep NV in May for $900 million.
The sale of the Citi unit is expected to be the first of a handful of big deals in the German retail banking market. See the full story on
TheDeal.com for more on where the others are expected. -
Paul Whitfield
