Citi (C) Just Can't Find Buyers for This Key Asset
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Citigroup (NYSE: C) has divested a load of non-central assets following the financial meltdown and fallout of 2008-09, but one item still remains: Citi Holdings.
According to reports Tuesday, Citi is having a devil of a time trying to get rid of the asset -- formerly known as OneMain Financial -- which shrank from $662 billion in the first quarter of 2009 to $308 billion currently.
The unit has accumulated $59 billion in losses since 2007, and prospects of the economy continuing to slump have Citi scrambling to rid itself of the unit.
A large chunk of Citi Holdings' assets (about 40 percent overall), are home mortgages. Of the total, about 33 percent of those are home-equity lines of credit, which can be rendered worthless should the borrower file for bankruptcy.
Other assets in the group include a 49 percent stake in the Smith Barney brokerage, corporate debt-backed securities, a private-label credit card business, and some other risky assets, according to the WSJ.
Of all the holdings, the credit card business is now profitable, but still struggling to find a buyer. Citi hashed out deals with retailers like Home Depot (NYSE: HD), Sears Holdings (Nasdaq: SHLD), Macy's, and others.
Citi Holdings CEO, Mike Corbat, has done a balancing act, trying to divest assets but not give too much away. He's insisted on taking the unit off the market instead of selling it below its intrinsic value.
Cash gained on the sale and freed-up capital could also be returned to investors, something CEO Vikram Pandit has been longing to do. Citi currently pays just a 1 cent quarterly dividend.
Citi shares are 1.7 percent lower Tuesday morning.
According to reports Tuesday, Citi is having a devil of a time trying to get rid of the asset -- formerly known as OneMain Financial -- which shrank from $662 billion in the first quarter of 2009 to $308 billion currently.
The unit has accumulated $59 billion in losses since 2007, and prospects of the economy continuing to slump have Citi scrambling to rid itself of the unit.
A large chunk of Citi Holdings' assets (about 40 percent overall), are home mortgages. Of the total, about 33 percent of those are home-equity lines of credit, which can be rendered worthless should the borrower file for bankruptcy.
Other assets in the group include a 49 percent stake in the Smith Barney brokerage, corporate debt-backed securities, a private-label credit card business, and some other risky assets, according to the WSJ.
Of all the holdings, the credit card business is now profitable, but still struggling to find a buyer. Citi hashed out deals with retailers like Home Depot (NYSE: HD), Sears Holdings (Nasdaq: SHLD), Macy's, and others.
Citi Holdings CEO, Mike Corbat, has done a balancing act, trying to divest assets but not give too much away. He's insisted on taking the unit off the market instead of selling it below its intrinsic value.
Cash gained on the sale and freed-up capital could also be returned to investors, something CEO Vikram Pandit has been longing to do. Citi currently pays just a 1 cent quarterly dividend.
Citi shares are 1.7 percent lower Tuesday morning.
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