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Tuesday, May 13, 2008 --- 67 days ago http://mysensex.com/news-report/9893-city-bank-pandits-shrinking-citi.html
| So much for Citigroup's legacy.
The banking giant said Friday it will sell or run off at least $400 billion of the $500 billion in assets it identified as "not central" to its mission, including $170 billion worth of marked-to-market assets in its investment banking division. The balance sheet shrinking, which will take place over the next three years, is more than double the amount analysts expected.
Vikram Pandit, Citigroup's (nyse: C - news - people ) new chief executive, is calling these "non-core" or "legacy" assets, and it's easy to conclude that he means all of the junk accumulated over the last few years of aggressive expansion into leveraged lending and structured finance at the direction of his predecessor, Charles Prince.
For example, of the $500 billion in "legacy assets," $30 billion is in highly leveraged loan commitments, another $25 billion is toxic subprime collateralized debt obligations, and $55 billion is in off-balance-sheet entities that are highly illiquid. The rest are in real estate ($175 billion) and auto loans ($20 billion).
Some of those assets are distressed and would be difficult to sell at the moment, if at all, even at steep discounts. And Citi is offering them at the same time rival Wall Street banks are shedding assets, making it all the harder to unload them quickly.
Some other banks are creating "bad banks," or separate work-out funds, and moving distressed holdings off their balance sheets quic ... |
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