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Citi Still Has Half Trillion in Assets to Go

Citigroup CEO Vikram Pandit thinks the company still needs to shed a little less than half a trillion dollars in assets in order to be rightsized.

Updated for closing share price, clarification of total asset figures.



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CEO Vikram Pandit thinks the company is a little less than half a trillion dollars away from being rightsized.

Speaking in Frankfurt, Germany on Monday, Pandit said Citigroup's aim is to bring assets down 40% from their peak in the third quarter of 2007, according to published reports.

Pandit has spoken along these lines before, using the same period as a reference point in comments before a Congressional panel in early March.

"We have cut the size of our balance sheet by half a trillion dollars, or 21% from peak levels in the third quarter of 2007, and substantially reduced our exposure to risky assets," he said then.

Citigroup's total assets stood at $1.86 trillion as of Dec. 31, compared to $2.36 trillion at the end of the third quarter of 2007, in line with the 21% decline that Pandit cites. To get down 40% from the peak to total assets of roughly $1.42 trillion, Citigroup will need to trim another $446 billion or so from the balance sheet.

Citi Holdings' "bad bank" portfolio had assets of about $547 billion at the end of the year. That figure has been lowered a bit since then through the company's successful IPO of


(PRI) - Get Primerica, Inc. Report

, as well as the completion of the sale of $1.25 billion in assets from its U.K. card portfolio in March.

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Divestitures and writedowns in the value of troubled assets have been the company's main methods of shrinking the balance sheet and the approach is likely to remain the same from here. The largest chunk of Citi Holdings at the end of the fourth quarter was local consumer finance operations with assets of about $358 billion. Slightly less than half of that figure is related to CitiMortgage, which has been the subject of speculation about possible downsizing of late.

No doubt the company would love to repeat the success of the Primerica IPO but none of the other businesses in Citi Holdings seem likely to attract the same level of interest from Wall Street as stand-alone entities. Citigroup could look to sell its 49% stake in the Morgan Stanley Smith Barney brokerage and asset management venture to partner

Morgan Stanley

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but that move wouldn't move the dial significantly as the holdings were valued at around $26 billion at year-end.

Pandit was appearing on a European Central Bank panel to discuss financial system policy, according to

Dow Jones

, which also quoted him as saying the derivatives markets needs more transparency, among other things.

Citigroup also broke a little news of its own on Monday, naming Marc Luet the head of its Citicorp Consumer business for the EMEA (Europe, Middle East and Africa) region. Luet previously worked at

Visa Inc.

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The stock rose another 2% on Monday to close at $4.64 on volume of 430.5 million. The issue's trailing three-month daily average churn is 495 million. Year-to-date, shares are up nearly 40%, with most of the run-up coming in March. The breadth of the recent rally has only added to the pressure on Pandit & Co. were already under to turn in a strong first-quarter report on April 19. Citigroup is holding its annual shareholders meeting the next day, so the faithful will have a ready forum to air their thoughts if the numbers disappoint.

Wall Street's current consensus estimate is for a small loss, breakeven on a per share basis, in the March quarter on revenue of $20.9 billion. That compares to a loss of 18 cents a share on revenue of $24.8 billion in the same period a year earlier, and a loss of 33 cents a share in the fourth quarter.

JPMorgan Chase

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will be the first of the big banks to report, issuing its results on Wednesday.

Bank of America

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will follow with its numbers on Friday.


Written by Michael Baron in New York