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 It looks like Citigroup Inc. might be divesting some more assets. Macquarie Group Ltd. has apparently bid for Citigroup's Australian retail stockbroking and wealth management unit, Citi Smith Barney, according to Reuters and The Australian Financial Review.
The bid would revive a
proposal from National Australia Bank Ltd. Reports are that Citi's board was "reluctant to proceed." Citi Smith Barney earned $14.2 million net profit, according to the Reuters report.
However, there are reports that a sale of Citi's unit is only speculation, according to The Australian. The paper estimated a price tag of just A$30 million ($20 million) on the Smith Barney unit and said Macquarie was in talks to purchase a one-third stake in Hengtai Securities instead. In the past Citi has said it is not interested in selling Smith Barney even though it might boost confidence in the bailed-out bank. However, Pandit has been gradually divesting international assets to shore up much needed capital, so selling a foreign piece of Smith Barney is entirely possible. Recent divestitures include this month's $6.6 billion sale of Citi Deutschland to Crédit Mutuel-CIC. Citi also has explored domestic divestitures too. The bank was close to divesting Primerica Financial Services Co. to JC Flowers & Co. LLC and Protective Life Corp., but the sale, which would have brought in $7 billion, was reportedly canceled. Chances are that if there are bids on the table for the Australian asset, Citi would take a peek. Also, Bloomberg suggests Citigroup is going to have some major write-downs it will need to communicate to investors soon and figures the bank has about $2.1 trillion on its balance sheet, so more divestitures are likely in 2009. - Maria Woehr Bove interview: Citigroup may sell to Deutsche Bank Citi no longer can afford to own Indian back-office services Two bidders left in Citi's auction of its German unit Primerica sale is a bust for Citi Did Capital One bully Citigroup out of Chevy Chase deal? CategoriesComments Deal Video
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This level of asset reduction is not a succession of divestures , it is in reality a banking break-up. Divestitures are hugely complicated and ING will have their hands full trying to sort through soft assets that have real intrinsic value. Let’s see how long this takes!