CITIBANK TURNING A BLIND EYE LOCKING AFRICAN COLOMBIAN'S OUT OF WORK...........

Citi to slash a fifth of balance sheet in coming years......
Company aiming for 9% revenue growth in coming years, management says.

NEW YORK (MarketWatch) -- Citigroup Inc. said Friday that it would slash more than a fifth of the assets currently on the balance sheet over the next three years, in a bid to shore up its capital base and divest itself of riskier investments, the banking giant said Friday.

The company announced plans to sell about $100 billion in noncore businesses, and to eliminate by selling, or holding to maturity, some $400 billion of low-return and mark-to-market securities.

The company announced plans to sell about $100 billion in noncore businesses, and to eliminate by selling, or holding to maturity, some $400 billion of low-return and mark-to-market securities.

"These reductions will release capital that we could use in our other businesses," said Chief Executive Vikram Pandit. The $500 billion figure represents about 22% of the firm's total assets, he reported during a presentation to investors and analysts at Citigroup's midtown Manhattan headquarters. Read related commentary.

The asset reductions, which will be done either through sales or by holding to maturity, "will improve the quality of earnings" as they take place over the next several years, added Pandit.

Chief Financial Officer Gary Crittenden said that it would take about three years to run off and sell the assets, and that the divestitures would generate more than $40 billion of new incremental capital, above its current Tier 1 capital ratio of about 8.8% at the end of the first quarter.

More than 50% of the reduction would come in its consumer-banking business, primarily in the form of sales or runoffs of mortgage and mortgage-related securities, according to Citigroup.

The cuts will be broken down as follows: 4% from auto holdings; 5% from collateralized debt obligations related to subprime loans; 6% from highly leveraged commitments; 11% from structured investment vehicles; 35% from real estate; and 39% from other, unnamed assets.

Citi said all of the legacy asset wind-down would come in the securities and banking businesses, excluding alternative-investment businesses. Units the bank has been rumored to be considering selling include its private-equity branch in Japan, its German retail operations and an Australian retail brokerage.

Citigroup already has sold its Taiwanese Smith Barney brokerage and shuttered underperforming operations worldwide.

The same presentation showed that Citigroup would aim for 16% to 18% return on current equity. It also unveiled an ambitious strategy to reap 9% revenue growth as the company attempts to pull out from recent credit troubles.

Pandit further outlined how Citigroup expects to rebound from recent credit woes via a three-phase plan, during which he said Citi must first "get fit," then "restructure" and finally "maximize."

Divesting of "hobby" assets would be a major part of that "get fit" phase, he noted Friday.

Supplemental sources

The chief executive said that Citigroup will supplement the sell-off strategy with a push to achieve annual net revenue growth of 10% from its core businesses. Slides from the presentation broke down these increases as follows: 7% from card operations; 8% from consumer banking; 9% from both securities and banking and wealth management; and 14% from transaction services.

Citigroup has been hit hard by the global credit crunch and fallout in the U.S. subprime-mortgage market, as bad bets on securities and rising default rates forced the bank to write off billions of dollars on investments rendered virtually worthless.

As a result, the bank has dealt with close to $45 billion in credit losses and write-downs over the last year -- and has seen its stock slide more than 50% during the same period.

The further cuts announced Friday came as little surprise to analysts, who have watched Citigroup get rid of thousands of jobs (Crittenden recently said the total could be around 16,000) and shed several noncore businesses over the last 12 months.
The bank also slashed its dividend by more than 40% in January, and some have predicted that Citigroup will need to trim its payout to shareholders -- or eliminate it altogether.

So far, Wall Street has reacted coolly to the new strategy, with many analysts lukewarm about Citigroup's prospects at least until the global credit crunch eases.
Standard & Poor's stuck to that script Friday, saying it would keep its "hold" rating on the stock.

"While we believe the company's capital position is more sound following the recently announced capital infusions, we view the credit markets as still in turmoil and we expect further write-downs," wrote S&P bank analysts Erik Oja and Stuart Plesser.

Citigroup, they said, "still has about $29 billion of total direct subprime exposure."

Under the leadership of the recently installed Pandit, the bank has made a concentrated effort to improve its capital reserves through cash infusions from investors, and introduced a streamlined business model that focuses on the bread-and-butter business of banking. End of Story

COMMENTS:

Citibank in Colombia is locking African Colombian's out of job opportunities. I visited Citibank in Cartagena, Columbia on February 22, 2008 and spoke with the manager about their employment profile. I was told that 2 African Colombian's , out of a staff of 20, were employed at that branch. Cartagena is 80% African!

On February 28, 2008 I wrote Mr. Vikram Pandit and made him aware of this disparity. Since that time I have called his office on several occasions, without a response. On April 7, 2008 Congressman John Lewis of Georgia sent a letter to Mr. Carlos M. Gutierrez, Secretary of Commerce and Susan C. Schwab, US Trade Representative, with copies to Secretary of State Condoleezza Rice, requesting a more inclusive workforce in Colombia.

If Mr. Pandit refuses to respond to my letter indicating that he will address the matter in Columbia, in the very near future, Citibank Colombia will most certainly have picket lines around their banks.

Joe Beasley, President, African Ascension ~ www.africanascension.blogspot.com

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