Mumbai: Citigroup Inc, the largest US bank, will sell its German consumer lending business to France's Credit Mutuel for $7.8 billion (4.9 billion euros), as part of a global reorganisation.

Credit Mutuel will also pay Citi the German unit's earnings accrued in 2008 through the closing, which is expected in the fourth quarter.

The sale is part of Citigroup chief executive Vikram Pandit's plan to dispose of $400 billion of assets after losses piled up from subprime mortgages and other risky debt.

Citi's German consumer business, with 6,800 employees about 3.25 million customers, operates 340 branches and has a market share of nearly seven per cent.

The sale of the German unit, known as Citibank, which lends for everything from televisions to cars and contributed nearly three per cent of it's global pre-tax profit in 2006, marks a change in direction for the global financial services powerhouse.

The unit had net income of 365 million euros in 2007, down 16 per cent from the previous year. Citigroup's roots in Germany go back to 1926.

"This is another strategic step in our effort to reorganise Citi, strengthen our balance sheet, and put us squarely on the path to future growth," Pandit said in a statement.

Citigroup has lost over $46 billion in bad loans and write-downs since the middle of 2007 and is  expected to post its third straight quarterly loss this week.

The acquisition of Citibank in Germany will allow the French bank to expand beyond its main mortgage business and grab a larger share of consumer lending business in Europe's biggest economy. Credit Mutuel had already extended business to Luxembourg and Switzerland.

Germany's Deutsche Bank AG, which is seeking to beef up its retail business, had also bid for the Citi business.

Citigroup expects a $4 billion after-tax gain from the sale, which will boost its Tier-1 capital ratio, a measure of its ability to cover losses, by 0.6 of a percentage point.

The bank had already raised more than $40 billion of capital since late last year.