August 5, 2009 - 1:39am
Citigroup CEO Vikram Pandit said in an interview with Singapore`s Business Times that the bank plans to sell 20 businesses in consumer finance area, many of them located in Europe. The move was due to the shift in the consumer finance market where "there is less funding availability and they are probably less robust as businesses." Besides, Pandit added that on the completion of the exchange of preferred shares for common equity, the bank had 12.7 % tier 1 capital and more than 9 % tier 1 common capital. That reflects an "incredible financial strength" of the group's capital position.
In July, the bank has said that investors have agreed to swap $32.8 billion of preferred securities for common stock, and the U.S. government, which will officially take a 34 % equity at the bank and become its largest shareholder, will swap $25 billion. The U.S. third-largest lender conducted the offers after heavy credit losses and writedowns prompted a series of bailouts, including a $45 billion injection of taxpayer funds from the Troubled Asset Relief Program.
The New York-based bank reported a quarterly profit of $4.28 billion, in comparison with a year-earlier loss of $2.5 billion. However, the second quarter was boosted by $6.7 billion gain from the sale of its Smith Barney brokerage. Without that one-off gain the lender would have reported a $3.7 billion loss.
The new, restructured Citi will have three main lines of business of roughly equal size, which are a consumer bank, a securities bank, which will include investment banking operation, and a financial service for business. Pandit said its Asian operation, which generated $2.8 billion net income for the group's global income or around 40 %, will be a big part of the group's future.
Additionally, Citigroup has been overhauling upper management and its board, adding seven new directors this year, and is trying to shed consumer finance, insurance and toxic assets.
In July, the bank has said that investors have agreed to swap $32.8 billion of preferred securities for common stock, and the U.S. government, which will officially take a 34 % equity at the bank and become its largest shareholder, will swap $25 billion. The U.S. third-largest lender conducted the offers after heavy credit losses and writedowns prompted a series of bailouts, including a $45 billion injection of taxpayer funds from the Troubled Asset Relief Program.
The New York-based bank reported a quarterly profit of $4.28 billion, in comparison with a year-earlier loss of $2.5 billion. However, the second quarter was boosted by $6.7 billion gain from the sale of its Smith Barney brokerage. Without that one-off gain the lender would have reported a $3.7 billion loss.
The new, restructured Citi will have three main lines of business of roughly equal size, which are a consumer bank, a securities bank, which will include investment banking operation, and a financial service for business. Pandit said its Asian operation, which generated $2.8 billion net income for the group's global income or around 40 %, will be a big part of the group's future.
Additionally, Citigroup has been overhauling upper management and its board, adding seven new directors this year, and is trying to shed consumer finance, insurance and toxic assets.