Citi Holdings has announced that it will incorporate non-core businesses while Citicorp will house private and investment bank as well as consumer finance businesses
Citigroup, one of the worlds leading banks by assets on Friday has announced a higher-than-expected loss for the October-December quarter and said it will split into two business.
Citicorp would house, among other things, the companys private and investment bank as well as its credit card and consumer banking business.
Citi Holdings would incorporate its so-called non-core businesses, including its Smith Barney brokerage and a pool of troubled assets that have plagued the firm for more than a year.
Citi said, "We anticipate that Citicorp will have assets of about US$1.1 trillion and will be approximately 65% deposit funded."
CEO Vikram Pandit said that the difficult economic and market environment forced the New York-based banks hand, adding that the move will help simplify the organisation and help better serve both clients and customers.
In a statement, he said, "The realignment will preserve what makes Citi unique - its global, universal banking footprint. We will continue to move aggressively to get Citi back on the right track and return it to a position of sustainable financial success."
Citis shares rose nearly 6% in pre-market trading following the release. But shares of the battered bank have plunged 43% so far this week due to concerns about its future.
During a conference call on Friday morning, Pandit said Citi would continue to look at all options for its Citi Holdings businesses, but added that the bank was not in a rush to sell some of those units.
The new structure will have the bank operating without the burden of billions of dollars of toxic assets accumulated during the mortgage bubble and made up of bad home loans and various derivatives.
However, the restructuring will effectively reverse the 1998 merger between Citicorp and Travelers Group. The deal created the so-called "universal bank" business model, which aimed to offer a whole host of financial services under one roof.
Separately, the New York City-based bank recorded a net loss of US$8.29bn, or US$1.72 a share, during the fourth quarter, representing the companys fifth-straight quarterly loss. The bank lost a total of US$18.72 billion in 2008.
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