Citigroup to sell off $400 billion of assets over next three years: CEO Vikram Pandit

09 May 2008

Citigroup CEO Vikram Pandit is going about his task of bringing the world's largest bank back to profitability in a very systematic manner.

After raising more than $44 billion in capital from institutional investors through stake sales and private offerings, he has now decided to sell off as much as $400 billion of the bank's trillion dollar plus assets over the next three years.

Its last stake sale at the end of April exceeded the target the bank expected to raise by 50 per cent (See: Citigroup stake sale fetches $4.5 billion; exceeds target by 50 per cent)

Citigroup announced the plan today in a presentation posted on the company's web site. The New York-based bank, which lost $5.1 billion in the first quarter, has recorded more than $40 billion of credit losses and write-downs since the sub-prime mortgage market collapsed last year, topping the list of financial institutions hit by the crisis. The bank has also decided to shed 9,000 people from its workforce in an effort to cut spiraling costs.

In his attempt to restructure the organisation, Pandit has already changed several members of the senior management. He has brought in his former Morgan Stanley colleague John Havens to be in charge of Citigroup's trading and investment banking, while transferring US consumer head Steve Freiberg to head a new credit-card division and recruiting former Wells Fargo & Co executive Terri Dial to oversee consumer banking in the country. The India operations have also seen a change of guard in the cards business.

Pandit is meeting shareholders today in New York to disclose details of his turnaround plan for the bank. He is expected to propound that Citigroup should concentrate on four main lines of business - credit cards, wealth management, the corporate bank, and investment banking - and sell off ''non-core'' operations.