Fire sale to continue at Citigroup

LONDON (ShareCast) - Fallen US banking giant Citigroup plans to offload around $400bn of assets as it strives to return to profitability.

Recently appointed chief executive officer Vikram Pandit told shareholders at a general meeting Friday that the bank would make the disposals over the next three years.

The disposals would continue a trend already in place. In April, Citi sold the Diners Club charge card business and the leasing and financing business CitiCapital, while in early May it agreed to divest employee-benefit joint venture CitiStreet LLC.

Provided the assets are sold above book value, the sales will boost Citigroup’s Tier 1 capital ratio, the core measure of solvency required by regulators. The company has recorded in excess of $40bn of credit losses and write-downs since the start of the sub-prime mortgage lending crisis last year.

Pandit told investors that he expects the company to return “over time” to the days when it regularly achieved a return on equity (ROE) of between 18% and 20%. Last year the company’s ROE was just 3%.