Chillin' out till it needs to be funded
Citigroup plans to sell 20 businesses in consumer finance area, many of them located in Europe, its CEO Vikram Pandit said in an interview with Singapore’s Business Times.
He said 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.” Pandit also said that the group’s capital position following the completion of the exchange of preferred shares for common equity in July, reflected an “incredible financial strength.” “On the completion of our exchange offer, we had 12.7 percent tier 1 capital and more than 9 percent tier 1 common capital,” Pandit said during his recent trip to Singapore.
The New York-based bank has said in July investors have agreed to swap $32.8 billion of preferred securities for common stock, and the US government, which will officially take a 34 percent equity at the bank and become its largest shareholder, will swap $25 billion. The US 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.
Citigroup reported a quarterly profit of $4.28 billion, compared to 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.