AI
Friday, May 09, 2008 9:19:17 PM
Citigroup aims to shed $400 billion of assets
Citigroup Inc said on Friday it plans to shed $400 billion of assets within three years and boost revenue by up to 10 percent annually, in a bid to restore profitability after huge losses tied to flagging mortgage and credit markets.
Vikram Pandit, who became chief executive of the largest U.S. bank in December, revealed the plans at a much-anticipated presentation to investors and analysts. He has faced growing demands to slash costs, shed poor-performing businesses, and reinvigorate a stock price down by more than half in the last year.
Citigroup shares were down 60 cents, or 2.5 percent, at $23.70 in afternoon trading on the New York Stock Exchange.
"It's definitely going to be a show-me story," said Thane Bublitz, a senior analyst at Thrivent Financial for Lutherans in Appleton, Wisconsin.
Citigroup lost nearly $15 billion in the last two quarters, and has suffered more than $45 billion of write-downs and credit losses since last summer, as the housing slump deepened, subprime mortgages imploded and credit markets tightened. More jobs will be cut, on top of 13,200 announced this year.
"It's a net positive for Citi just to shrink," said Henry Asher, president of Northstar Group Inc, a New York money manager.
Pandit said he plans to reduce $500 billion of non-core "legacy" assets, an amount he said was not "trivial," to below $100 billion in two to three years, largely through sales.
Among the assets to be shed are real estate, leveraged loans, complex debt and structured investment vehicles. Citigroup ended March with $2.2 trillion of assets.
Some investors believe Citigroup, built over nearly two decades by Sanford "Sandy" Weill into a behemoth now operating in some 106 countries, is too big. Charles Prince, who quit as chief executive in November, long rejected that accusation.
"Pandit is telling investors he is going to try to restructure," said Tom Sowanick, chief investment officer at Clearbrook Financial LLC in Princeton, New Jersey. "He seems to have a different heart than Sandy Weill and Chuck Prince."
Citigroup Inc said on Friday it plans to shed $400 billion of assets within three years and boost revenue by up to 10 percent annually, in a bid to restore profitability after huge losses tied to flagging mortgage and credit markets.
Vikram Pandit, who became chief executive of the largest U.S. bank in December, revealed the plans at a much-anticipated presentation to investors and analysts. He has faced growing demands to slash costs, shed poor-performing businesses, and reinvigorate a stock price down by more than half in the last year.
Citigroup shares were down 60 cents, or 2.5 percent, at $23.70 in afternoon trading on the New York Stock Exchange.
"It's definitely going to be a show-me story," said Thane Bublitz, a senior analyst at Thrivent Financial for Lutherans in Appleton, Wisconsin.
Citigroup lost nearly $15 billion in the last two quarters, and has suffered more than $45 billion of write-downs and credit losses since last summer, as the housing slump deepened, subprime mortgages imploded and credit markets tightened. More jobs will be cut, on top of 13,200 announced this year.
"It's a net positive for Citi just to shrink," said Henry Asher, president of Northstar Group Inc, a New York money manager.
Pandit said he plans to reduce $500 billion of non-core "legacy" assets, an amount he said was not "trivial," to below $100 billion in two to three years, largely through sales.
Among the assets to be shed are real estate, leveraged loans, complex debt and structured investment vehicles. Citigroup ended March with $2.2 trillion of assets.
Some investors believe Citigroup, built over nearly two decades by Sanford "Sandy" Weill into a behemoth now operating in some 106 countries, is too big. Charles Prince, who quit as chief executive in November, long rejected that accusation.
"Pandit is telling investors he is going to try to restructure," said Tom Sowanick, chief investment officer at Clearbrook Financial LLC in Princeton, New Jersey. "He seems to have a different heart than Sandy Weill and Chuck Prince."
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