Citigroup sells German unit to France's Credit Mutuel for $7.8 billion

11 July 2008

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.