Citi Breaks Out Good Bank/Bad Bank Results

Citigroup on Friday touted the health of what it considers its core businesses going forward, detailing the performance of its restructured business lines.
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on Friday touted the health of what it considers its core businesses going forward, as it broke out historical financial data from its recently restructured business lines.

Citi earlier this year was split into a so-called good bank, which housed assets it planned to keep, and so-called bad bank, which included soured securities and other assets it planned to unload. At the end of March, Citicorp, the good bank, made a profit of $7.68 billion, while Citi Holdings, the bad bank, recorded a loss of $5.34 billion, according to Citi's financial data. The company broke out quarterly results for Citicorp and Citi Holdings from the first quarter of 2007 through the first quarter of 2009.

Citi on the whole had reported a profit of $1.59 billion for the first three months of the year.

At the end of March, the good bank had revenue of $20.56 billion, while its bad bank had a negative revenue of $3.45 billion.

For all of 2008, Citicorp made a profit of $6.16 billion, while Citi Holdings had a loss of $32.02 billion. Citi on the whole recorded a $27.68 billion loss for 2008.

Citi had announced its split -- which also included a third group designated corporate/other -- in January as a way to "reduce assets, optimize value, and simplify and streamline" the company. But regulators had pressured the financial institution to make changes, given that it had received $45 billion in capital injections from the U.S. government as it struggled to come up for air from billions in losses on illiquid securities and consumer loans.

The company also has been retooling the top of its

executive ranks.

Citi, along with

Bank of America

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, reports second quarter earnings on July 17. Citi said it plans to break out data from the three units in financial results going forward, even though they are not divided legally.

"The creation of Citicorp and Citi Holdings reflects our strategy to refocus the company on its greatest strength: our global institutional and consumer banking businesses, while exiting non-core businesses and reducing risk assets," CEO Vikram Pandit said. "Citicorp is an extraordinary franchise with the largest global presence of any financial services firm in the world. Our focus is to grow Citicorp while managing our long-term exit from the non-core businesses and assets held in Citi Holdings."

Citicorp includes the consumer banking franchise and its institutional clients group, consisting of securities and banking operations and transaction services. Citi Holdings includes its brokerage and asset management operations, its consumer finance operations and a special asset pool of illiquid securities.

At the end of the first quarter 2009, Citi had $235.8 billion of on-balance sheet assets covered by a loss-sharing agreement with the U.S. government, Citi said Friday. The company's local consumer lending businesses were approximately 75% of these assets, while the Special Asset Pool holds the remainder, consisting of mostly former securities and banking assets, it said.

Citi shares closed down 3.7% to $2.59 on Friday.