Chillin' out till it needs to be funded
Citigroup Inc C.N agreed to merge its Smith Barney brokerage with Morgan Stanleys MS.N wealth management unit on Tuesday, and is expected to make further asset sales to raise capital and to isolate toxic assets from the rest of the bank.
Citigroup, once the worlds largest bank, may announce plans on January 22 to formally shed the “financial supermarket” approach once championed by former Chief Executive Sanford “Sandy” Weill, but which is now being disavowed by Chief Executive Vikram Pandit. It is expected the same day to post a big fourth-quarter loss.
Citigroup is planning to adopt the equivalent of a “good bank, bad bank” structure, in which it would slim down to a business model recalling the former Citicorp, a person familiar with the plan said.
The plan envisions focusing on corporate, investment and retail banking and keeping a slimmer trading business, while moving unwanted assets and businesses such as complex debt to a separate structure, the person said on condition of anonymity.
Citigroups “bad bank” would have about $600 billion of assets, close to one-third of Citigroups balance sheet, which could eventually be sold or spun off, the person said.
Citigold in China also closes down. Individual clients merge into retail business. No roadmap for other Asian units.