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Will Citigroup be sold off?

Source: PTI
Last updated on: November 21, 2008 15:04 IST
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Amid plunging stock price, executives at troubled banking firm Citigroup are mulling the possibility of auctioning off all or parts of the financial giant, says a media report. Quoting people familiar with the matter, 'The Wall Street Journal' said: "Executives at Citigroup Inc, faced with a plunging stock price, began weighing the possibility of auctioning off pieces of the financial giant or even selling the company outright."

WSJ further said that 'the internal discussions are at a preliminary stage and don't signal that Citigroup's board and management are backing down from their insistence that the New York company has ample capital, funding and strategic direction.'

"Citigroup officials have decided they need to reckon with a range of scenarios that were unthinkable only weeks ago," the newspaper said. Investors are dumping financial sector stocks on concerns over global woes.

JP Morgan Chase shares slid 18 per cent, while Bank of America fell 14 per cent and Citigroup declined 26.41 per cent, or $1.69, to $4.71. Meanwhile, another daily The Australian quoting people familiar with the situation reported that the board of directors of Citigroup are scheduled to have a formal meeting on Saturday to discuss the options.

The Australian added that the sell-off in Citigroup shares has led executives to start laying out possible contingency plans.

The Australian further reported 'in addition to pondering a move to sell the entire company to another bank, executives have started exploring the possibility of selling off parts of the firm, including Smith Barney retail brokerage, the global credit-card division and the transaction-services unit'.

Quoting people familiar with the situation, the newspaper said, "Pandit, an enthusiastic defender of Citigroup's existing mix of businesses, is loath to pursue such an approach."

Meanwhile, Citigroup in a statement had said: "Citi has a very strong capital and liquidity position" and is "focused on executing our strategy", which includes cutting expenses and selling assets.

"We believe the benefits will be seen over time". Quoting people familiar with the matter The Australian said, "In Washington, Citigroup officials this week have been urging lawmakers and regulators to intervene by making it tougher for investors to place bets that the company's share price will fall."

"The company, along with representatives of other banks, is lobbying the Securities and Exchange Commission to reinstate the ban it temporarily imposed this autumn on short-selling of financial stocks," the newspaper added.

Citigroup executives and directors are bolstering the confidence of investors, clients and employees.

This week, in one move aimed at quelling the uncertainty about Citigroup's exposure to risk, the company said it would buy $17.4 billion in assets from its structured investment vehicles, or SIVs, complex investment tools that first encountered trouble last year due to their mortgage-related  holdings, The Australian added.
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