Citi's Getting Smaller, But That's a Good Thing

Updated from 2:58 p.m. EST

Citigroup's (C Quote) reported discussions to sell a portion of its Smith Barney brokerage to Morgan Stanley (MS Quote) is likely to strengthen the bank's traditional banking operations and give it a much-needed cash boost.

Even as rivals like JPMorgan Chase (JPM Quote), Bank of America (BAC Quote) and Wells Fargo (WFC Quote) get larger through opportunistic acquisitions amid the credit crisis, Citi's potential downsizing will not make it a "second-tier player" in terms of retail and commercial banking, says Cassandra Toroian, the president and chief investment officer of Bell Rock Capital.

"Citi is a great brand and I would argue that they should have never gotten involved in all these other businesses to begin with," Toroian writes in an email to TheStreet.com. "They should have stuck to being a bank -- that is their brand strength." She does not own shares of Citi. ...