Citigroup to slash 400 bln dlrs in assets

Fri May 9, 5:34 PM ET

NEW YORK (AFP) - Citigroup, reeling from the subprime mortgage crisis, said Friday it plans to sell roughly 400 billion dollars in assets in a streamlining reorganization aimed at restoring the US banking giant to profit.

The announcement was made by the new chief executive, Vikram Pandit, in a presentation to the financial community on the ailing bank's strategy.

Citigroup has hemorrhaged nearly 45 billion dollars in the past nine months in losses and write-downs amid soured subprime-related bets.

The bank said it wants to sell the non-core assets, representing about 20 percent of its 2.2 trillion dollars in assets, over the next two or three years.

The vast majority of the assets to be shed are within its consumer banking and securities banking operations, 63 percent and 34 percent, respectively.

The unprecedented sweeping downsizing undertaken by Pandit, who became CEO in December, marks a bold change in direction for the bank and its sprawling businesses.

The bank said it wanted to focus on stability and growth, citing its unique global presence and a "large footprint in (the) fastest-growing areas in the world."

The financial services colossus said it was targeting net revenue growth of around 10 percent for its core operations within a two- to three-year timeframe.

"The industry is looking for what the future is ... I think we've been on a 20-year cycle," Pandit said in unveiling the changes. "We have a new leadership ... there's obviously technologic investments that have to be made."

Citigroup said it was targeting revenue growth of 9.0 percent for its global wealth management business and 7.0 percent for its global credit card business.

The bank also targeted revenue growth of 8.0 percent for its consumer banking business, 9.0 percent for its securities and banking business and 14 percent for its transaction services business.

"The company hopes that this will allow them to put capital back in its core business, which will then increase the firm's return on equity," Briefing.com analysts wrote in a note to clients.

Shares of the company, a component of the Dow Jones Industrial Average, skidded 2.76 percent to close at 23.63 dollars.

On April 18, the company posted a net loss of 5.1 billion dollars for the first quarter and said it would cut an additional 9,000 jobs as it struggles with bad bets on US subprime, or high-risk, mortgages amid the worst housing slump in decades.

It plans to cut a total 16,000 jobs in the first six months of the year, from a workforce of 370,000 as of end-December.

It was the second quarterly loss for Citigroup, which took a total 13.9 billion dollars in write-downs for the January-March period.

Citigroup is the US bank hardest hit by the subprime crisis that erupted in August, wreaking havoc on financial markets and causing a credit squeeze that is stifling growth in the global economy.

The struggling bank has raised more than 42 billion dollars from investors since November to shore up its finances, mainly in Asia and the Middle East.

Its top investors include the Government of Singapore Investment Corporation Pte Ltd, the Kuwait Investment Authority, Prince Alwaleed bin Talal bin Abdulaziz of Saudi Arabia and former Citigroup chief executive Sanford Weill.