Citigroup may sell $400bn assets

By Joseph A. Giannone and Dan Wilchins

New York, May 9: Citigroup Inc, hard hit by the global credit crunch, is expected to present plans to sell roughly $400 billion of extraneous assets when it meets with investors and analysts, people familiar with the situation said.

Newly-installed chief executive Vikram Pandit, scrambling to slash Citi’s costs and get past credit market problems, also intends to reaffirm his promise to cut annual expenses at the largest US bank by roughly 20 percent, one of the sources told Reuters on Thursday.

Citigroup declined to comment.

The sales could amount to nearly 20 per cent of Citi’s current assets, and according to the Financial Times, which first reported the story on Thursday, would take place over several years.

Although Citi has said previously that it plans to shed assets to improve its capital position, the magnitude of the potential sales struck some analysts as worrisome. "The only reason you’d sell off that many assets is you have a lot more losses coming than you originally thought," said Jim Huguet, co-chief executive at fund manager Great Companies LLC, which does not own Citi shares.

Since late last year, Citi has recorded more than $45 billion of writedowns and credit losses, raised more than $40 billion of new capital including $2 billion of preferred shares this week, and slashed its dividend 41 per cent. Precisely which non-core assets are for sale is unclear, but analysts speculated that consumer fina-nce businesses in the United States, Japan, Mexico, and Germany are possible.

The sources requested anonymity because the plan had not yet been announced.

Investors are impatient for improvement at Citi, whose share price has fallen more than 55 per cent over the last year. Pandit has faced demands from investors that he slash costs, shed poorly performing businesses and even split up the bank.

Some investors view Citi, built over two decades by Sanford "Sandy" Weill, as too big to govern, a charge that Weill’s hand-picked successor, Charles Prince, routinely denied. (Reuters)