Citi Expects to Sell Rest of Smith Barney

Citigroup CEO Vikram Pandit said the company will eventually sell its remaining stake in its Smith Barney joint venture with Morgan Stanley.
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CEO Vikram Pandit said the company will eventually sell its remaining stake in the Smith Barney joint venture entered into this summer with

Morgan Stanley

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Pandit served as the keynote lunch speaker on Wednesday at the Barclays Global Financial Services Conference held in midtown Manhattan.

The company in June completed the joint venture with Morgan Stanley's brokerage operations and Citi's wealth management gem, Smith Barney.

The company over the past year has been looking to divest noncore businesses as it looks to complete a turnaround in which it also undergoes a massive deleveraging of risk, cuts expense and shakes up senior level management. Smith Barney, despite its profitability, was deemed expendable.

Besides the Morgan Stanley-Smith Barney joint venture,


has also inked deals to sell other good assets, like Nikko Cordial, Nikko Asset Management and some overseas divisions. All of the noncore businesses had been siphoned off in Citi Holdings, which consists of brokerage and asset management, local consumer lending, and a special asset pool.

But troubled assets still hang over Citi's future. The company hasn't had much luck selling less palatable assets, like Primerica, CitiMortgage, CitiFinancial and a "special pool" of toxic assets backed by a loss-sharing agreement with the government.

Pandit was asked by one attendee during a question-and-answer session about the "saleability" of the remaining assets.


Our goal is to find the right home over time, as long as it takes, the right way

to optimize the value," he said.

Citi is winding down its non-core holdings by asset class, but in terms of residential mortgages, the company is looking to gradually run off of the loans.

Citi will continue to operate still other struggling yet attractive businesses will continue to be operated until Citi can find a buyer at an attractive price.

CitiFinancial, for example, "is a great business," Pandit said. "It's going through a cycle. It will at some point turn around. ... It also happens to be a business that needs funding and so it's one of those businesses we believe that we need to operate and manage" until the cycle turns around and Citi can approach the M&A market.

"These other businesses are going to have a bid," Pandit said. "

We're managing them for profitability until that time comes."

--Written by Laurie Kulikowski in New York.