Citi to Split into Two; Posts USD 8.29 Billion Q4 Losses

In an effort to turn around its fortunes, ailing financial services major Citigroup will be splitting itself into two separate businesses — Citicorp and Citi Holdings — one for traditional banking and another mainly for its riskier assets.

"With lower risk and a streamlined set of businesses, we expect Citicorp to be a high-return and high-growth business. And with the new Citi Holdings, we will be able to tighten our focus on risk management and credit quality for businesses with strong market positions but that are not central to our core franchise," Citi's India-origin Chief Executive Vikram Pandit said in a statement.

Citicorp would be handling the banking operations of the financial services major in over 100 countries.

"We anticipate that Citicorp will have assets of approximately 1.1 trillion dollars and will be approximately 65 per cent deposit funded," the statement added.

On the other hand, Citi Holdings would be made up of brokerage and retail asset management, local consumer finance and a special asset pool, whose management would focus on tightly managing risks and losses.

Local consumer finance including "CitiFinancial and CitiMortgage in the US, and consumer finance operations in Western Europe, Japan, India, Mexico, Brazil, Thailand and Hong Kong," would come under Citi Holdings, the statement said.

Pandit noted that the transition to the new structure would be done "as quickly as possible".

Citicorp's Global Institutional Bank would consist of global transaction services, corporate and investment bank and Citi private bank.

Further, the division's Retail Bank would have global branded card businesses, regional consumer and commercial banking franchises in the US, Asia, Latin America, Central and Eastern Europe, and the Middle East.

Meanwhile, Citi Holdings would comprise brokerage and asset management, local consumer finance and special asset pool that would manage the assets covered by the loss-sharing agreement with the US government parties.

"Citi recognises that major legal vehicle restructuring changes like this will require regulatory approvals and the resolution of tax and other issues. But Citi will manage the company consistent with this structure starting immediately, and management reporting will reflect this structure starting with the second quarter of this year," the statement said.