Citigroup posts loss, will split company into two
NEW YORK -- The new Citicorp will include the retail bank; the corporate and investment bank; the private bank, which serves wealthy individuals; and global transaction services.
Citi Holdings — which will account for $850 billion of Citigroup's $1.95 trillion in assets — will include Citi's asset management and consumer finance segments, including CitiMortgage and CitiFinancial. It will also be in charge of Citi's 49% stake in the joint brokerage with Morgan Stanley, and the pool of about $300 billion in mortgages and other risky assets that the U.S. government agreed to backstop late last year.
CEO Vikram Pandit's move will allow Citigroup to sell or spin off the Citi Holdings assets to raise cash. It also reveals the company's growing focus on back-to-basics lending and deposit-gathering, and dismantles the "financial supermarket" created a decade ago.
Pandit said Citi Holdings has some valuable businesses, but ones that are not "core" to Citigroup's mission as it tries to hone in on its global banking business and become more careful about risk.
He said he will consider "all options," but that "we're not in a rush to sell businesses."
Some investors have been calling for a breakup of Citigroup for years, as the bank struggled to keep up with its Wall Street peers. Those calls grew louder as the mortgage crisis caused the company's troubles to mount.
There has been harsh blame for Citigroup's woes directed at the board, too — and the company said Friday that it plans to get rid of more board members after the recent departure of long-time director and former Treasury Secretary Robert Rubin.
"There has been one announced departure from the board. Together with other anticipated departures, this gives us the opportunity to reconstitute the board and we will do so as quickly as possible," said Richard Parsons, Citi's lead director.
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