Citi sells brokerage as it heads for break up
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Citigroup will bring forward to tomorrow the release of fourth-quarter results that are widely expected to confirm a haemorrhaging of cash that is forcing its chief executive Vikram Pandit to begin the painful process of dismantling the bank to save it from ultimate collapse.
With little sign that the carnage stemming partly from the credit crisis has been contained, the dismemberment of Citigroup seems inevitable after its management confirmed rumours that it had agreed to surrender control of its Smith Barney brokerage operations in a joint venture with Morgan Stanley.
As Citigroup shares fell by almost 14 per cent in early trading in New York, the only question seemed to be how quickly Mr Pandit would have to shed parts of the Citigroup empire to satisfy both investors and the US government, which last year stepped in twice to pull the bank back from the brink.
"I think within 12 months, Citigroup no longer exists," commented William Smith, of Smith Asset Management, which owns Citigroup shares. Mr Smith has been one of the loudest critics of the bank on Wall Street, faulting it for poor management and for failing to properly integrate its many parts.
Originally scheduled for release next Wednesday, the fourth-quarter numbers are widely expected to show the bank lost an additional $2.6bn (£1.8bn). Some analysts warn that the losses in 2009 may total more than $12bn.
With the agreement to put Smith Barney under the roof of Morgan Stanley, the experiment of turning Citigroup into what was meant to be world's first global financial supermarket, where customers could buy any conceivable product from investment banking to insurance and credit cards, may already over.
Mr Pandit is believed to be considering jettisoning Citigroup's private label credit card business and two consumer-finance units. He may also order a severe cut-back in the trading the bank does on its own behalf. Not thought to be at risk, however, are parts of the bank dealing with mergers and acquisitions, corporate lending or indeed retail consumer banking.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments