Banking giant Citigroup says it will sell its German retail banking operation and some of its affiliates to Credit Mutuel, France’s third-biggest banking group, in a 4.9 billion euro (US$7.7 billion) cash deal.
In a statement released on Friday, Citigroup said the deal includes its Duesseldorf-based Citibank Privatkunden AG & Co KGaA, along with some affiliates. The deal is expected to close in the fourth quarter provided regulatory approvals are granted.
Citibank Germany earned 365 million euros last year and had net assets of 944 million euros. Citigroup said the deal would result in a post-tax gain of US$4 billion when it closes.
Citigroup has been trying to return to profitability after two straight quarters of losses, brought on by missteps in the mortgage market. One of chief executive Vikram Pandit’s goals is to improve computer systems and communication throughout the bank.
The decision to sell its German unit was the result of those goals, he said.
“This is another strategic step in our effort to reorganize Citi, strengthen our balance sheet, and put us squarely on the path to future growth driven by our core businesses,” Pandit said in a statement. “In Germany, our talented corporate and investment banking teams remain central to our strategy and we’re committed to maintaining their leadership position in this market.”
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