Banks
Citi Sells German Bank for $7.7 Billion
07/11/08 - 12:29 PM EDT
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Citigroup(C - Cramer's Take - Stockpickr) continued CEO Vikram Pandit's efforts to pare down the flagging banking giant Friday, unveiling an agreement to sell its German retail banking unit to a French bank for $7.7 billion. The sale of Citibank Privatkunden AG & Co. KGaA to Credit Mutuel is expected to close in the fourth quarter. The agreement also calls for Citi to pay earnings accrued in 2008 through the deal's closing. Citibank posted post tax earnings of 365 million euro last year, Citi said. Citi expects the deal to provide an after-tax gain of $4 billion upon closing, which would boost Tier-1 capital ratios by 60 basis points. "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 a company 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." Under Pandit's leadership, Citi is undergoing a re-engineering effort, which includes job cuts, organizational streamlining by geography and the sale of non-core assets. The bank is expected to report second-quarter results next Friday. Analysts polled by Thomson Reuters expect a loss of 59 cents a share. Citi shares were falling 1.7% to $16 in recent trading.
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