Citi to put 20 of its European consumer fin units on block

SINGAPORE: 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% tier 1 capital and more than 9% tier 1 common capital,��� Pandit said during his recent trip to Singapore. The New York-based bank has said in July that investors have agreed to swap $32.8 billion of preferred securities for common stock, and the US government, which will officially take a 34% 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 Programme.

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.

���We���ve done a pretty good job in the first two quarters of this year,��� Pandit said. ���But we got there after a lot of hard work last year. We reduced our assets by almost 25%. We reduced our risk by a lot more than that number. And we cut about $16 billion a year in expenses.���

The new, restructured Citi will have three main lines of business of roughly equal size, which are a consumer bank, a securities bank, which will include investment banking operation, and a financial service for business.

Pandit said its Asian operation, which generated $2.8 billion net income for the group���s global income or around 40%, will be a big part of the group���s future.

Citigroup has also been overhauling upper management and its board, adding seven new directors this year, and is trying to shed consumer finance, insurance and toxic assets.