Citigroup selling German business for $7.7bn
FRANKFURT, Germany (AP) — Banking giant Citigroup says it will sell its German retail banking operation and some of its affiliates to France’s Credit Mutuel, in USD 7.7 000 000 000 cash deal.
Citigroup is selling its German banking interests to help it return to profit in the future.
In an statement released Friday, Citigroup said the deal includes its Duesseldorf-based Citibank Privatkunden AG & Co. KGaA, along with some affiliates. The deal is expected to close in the fourth quarter provided regulatory approvals are granted.
Citibank Germany earned USD 573.3 000 000 in 2007 and had net assets of USD 1.5 000 000 000. Citigroup said the deal would result in a post-tax gain of USD 4 000 000 000 when it closes.
Credit Mutuel said the deal “affirms its European development strategy, particularly in retail banking, insurance and international financial services.”
The acquisition also extends its expansion in the past decade into Belgium, Luxembourg and Switzerland.
Cooperatively owned, Credit Mutuel is France’s second largest retail bank with nearly 15 000 000 customers and more than 5,000 branches, according to the bank’s Web site.
In 2007, it earned USD 4.3 000 000 000 on sales of USD 16.6 000 000 000. It also owns France’s CIC corporate and investment bank.
Citigroup has been trying to return to profitability after two straight quarters of losses, brought on by huge missteps in the mortgage market. One of Chief Executive Vikram Pandit’s goals is to improve the computer systems and communication throughout the bank.
The decision to sell its German unit was the result of those goals, he said.
“This is another strategic step in our effort to reorganize Citi, strengthen our balance sheet, and put us squarely on the path to future growth driven by our core businesses,” Pandit said in an statement. “In Germany, our talented corporate and investment banking teams remain central to our strategy and we’re committed to maintaining their leadership position in this market.”
The bank added that it remained “strongly committed to its remaining German businesses, including its full service corporate and investment banking business and its European data center, that is the biggest Citi data center outside the United States.”
Based in New York, Citigroup counts some 200 000 000 customer accounts and does business in more than 100 countries. It provides services for consumers, corporations and governments.
Its brands include Citibank, CitiFinancial, Primerica, Smith Barney, Banamex and Nikko.
Citigroup shares were down nearly 1 percent to close at USD 16.28 in trading Thursday on the New York Stock Exchange.
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