As expected, Citi has announced a reorg this morning, so pundits everywhere can write their “death of the financial supermarket” articles once again.
The company says it will be split into Citi Corp and Citi Holdings.
Citi Corp is described as:
Citicorp’s Global Institutional Bank will consist of:
- Global Transaction Services: an industry-leading business with a global network in about 140 countries.
- Corporate and Investment Bank: world-class relationship banking offering full range of advisory, underwriting, lending and market-making services; now re-focused with a lower risk profile.
- Citi Private Bank: global banking serving high-net-worth individuals, including about 30 per cent of the world’s billionaires.
Citicorp’s Retail Bank will consist of:
- Branded card businesses globally.
- Regional consumer and commercial banking franchises in the U.S., Asia, Latin America, Central and Eastern Europe, and the Middle East.
We anticipate that Citicorp will have assets of approximately $1.1 trillion and will be approximately 65 per cent deposit funded.
Citi Holdings will be a group of non-core businesses that include attractive long-term businesses with strong market positions. However, they do not sufficiently enhance the capabilities of Citi’s core business, and in many ways compete for its resources.
The Citi Holdings management team will seek to maximise the value of these businesses by running them well, restructuring and managing them through this tough economic cycle, and taking advantage of value-enhancing disposition and combination opportunities as they emerge. These businesses and assets will initially include:
- Brokerage and asset management: including the 49 per cent stake in Morgan Stanley Smith Barney, as well as Nikko Cordial Securities, Nikko Asset Management and Primerica Financial Services.
- Local consumer finance: including CitiFinancial and CitiMortgage in the U.S., and consumer finance operations in Western Europe, Japan, India, Mexico, Brazil, Thailand and Hong Kong.
- Special asset pool: will manage the assets covered by the loss-sharing agreement with the U.S. government parties in the ring-fenced portfolio; and other non-strategic assets.
Separately, the company has announced the details of its loss-sharing plan with the government, first established in November.