Frankfurt: Banking giant Citigroup says it will sell its German retail banking operation and some of its affiliates to Credit Mutuel, France’s third-biggest banking group, in a €4.9 billion (Rs33,139 crore) cash deal.
In a statement released Friday, Citigroup said the deal includes its Duesseldorf-based Citibank Privatkunden AG & Co. KGaA, along with some affiliates. The deal is expected to close in the fourth quarter provided regulatory approvals are granted.
Citibank Germany earned euro365 million in 2007 and had net assets of euro944 million. Citigroup said the deal would result in a post-tax gain of US$4 billion when it closes.
Citigroup has been trying to return to profitability after two straight quarters of losses, brought on by huge missteps in the mortgage market. One of chief executive Vikram Pandit’s goals is to improve the computer systems and communication throughout the bank.
The decision to sell its German unit was the result of those goals, he said.
“This is another strategic step in our effort to reorganize Citi, strengthen our balance sheet, and put us squarely on the path to future growth driven by our core businesses,” Pandit said in a statement. “In Germany, our talented corporate and investment banking teams remain central to our strategy and we’re committed to maintaining their leadership position in this market.”
The bank added that it remained “strongly committed to its remaining German businesses, including its full service corporate and investment banking business and its European data center, which is the biggest Citi data center outside the United States.”
Based in New York, Citigroup counts some 200 million customer accounts and does business in more than 100 countries. It provides services for consumers, corporations and governments.
Its brands include Citibank, CitiFinancial, Primerica, Smith Barney, Banamex and Nikko.
Citigroup shares were down nearly 1% to close at US$16.28 in trading on Thursday on the New York Stock Exchange.