Under CEO Vikram Pandit's "good bank/bad bank" strategy, the company has placed non-core assets that are being sold-off or wound-down within Citi Holdings.
Staite said "given that Citigroup has $151bn of tangible common equity but only needs $88bn to run Citicorp it shows that there is a further $63bn that is currently trapped within Citi Holdings and the DTA."
"This is capital that should be available to be returned to shareholders at some point assuming the group can utilize the DTA and that the $10bn of loan loss reserves within Holdings is sufficient to cover losses," Staite said, adding that the "timing of the capital return is highly debatable and clearly the Fed took a cautious view early this year. "
"Nevertheless," he said, "the fact that the Basel III ratio has reached 7.9%, the same as JP Morgan bodes well for the start of a capital return in 2013."
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