Citigroup is cleaning business

According to unofficial data, 51% of the broker will become one of the largest financial corporations Morgan Stanley, which will pay for a controlling stake of about $ 3 billion parties will also enter the option, under which a buyer can acquire the remaining stake in four years. The shift of control over Smith Barney to the new owner will create the largest brokerage structure in the U.S., the staff of which about 20 thousand people. It is assumed that the new broker will be called Morgan Stanley Smith Barney, his head co-president of Morgan Stanley James Gorman. Citigroup - the largest by assets American bank (the first three quarters of fiscal year 2008 total assets under its administration was more than $ 2 trillion). Smith Barney - the brokerage firm with a very big story. Company Smith Barney & Co. was formed in 1938 through the merger of brokerage structures Charles D. Barney & Co. and Edward B. Smith & Co. In 1980 the combined company came under the control of Primerica Financial Services. Last after acquiring a large stake in Travelers Insurance was the Travelers Group. In 1997, shortly before the massive financial crisis, Travelers Group acquired Salomon Brothers, giving birth to one of the largest investment banks - Salomon Smith Barney. Later investment bank has been reformed - retail brokerage group, serving private investors, and the research team were separated from investment banking business. Retail brokers and analysts were united in the new structure of Smith Barney. In April 1998 the merger of Travelers Group and Citicorp, and gave the world Citigroup. Ability to sell the brokerage division of Citigroup, market participants predicted the fall of 2008, although the top management of the bank's publicly stated he is not going to change the existing business model and get rid of the broker's directions. However, due to financial crisis, thanks to which in the past two years, shares of banking organizations fell by 88% (total loss amounted to about 67 billion dollars), Citigroup had to ask for help from state authorities to the U.S. - the Ministry of Finance, Federal Reserve and Federal Deposit Insurance Corporation. As a result of negotiations it was agreed that financial institutions will be given a guarantee for troubled assets, including loans to builders and commercial real estate loans to private equity funds on acquisitions of $ 306 billion dollars Besides, the parties agreed that the bank's capital will invest 20 billion dollars . in exchange for preferred shares. With the emergence of state structures in the capital of Citi began selling off its foreign subsidiaries. In October, the corporation is left with the investment company Nikko Antfactory, acquired by a group of companies led by Japanese bank Norinchukin Bank. In early December, the French group, Credit Mutuel-CIC has been sold for 6.6 billion U.S. division in Germany - Citibank Privatkunden AG & Co. At the same time Citi has sold the Japanese "daughter" NikkoCiti Trust & Banking Corp., Focused on asset management, one of the largest financial groups in the country - Mitsubishi UFJ Financial Group Inc., Which is offered for assets 25 billion yen (277 million dollars.). Business Citigroup is too diversified and it is difficult to manage, agree with the decisions of the new owners of the bank to sell part of its assets by market participants. "Now it is quite cumbersome, and many of its profitable divisions, such as business credit cards or investment banking, can be distinguished into separate companies for resale" - sums up the Bank of Moscow analyst Dmitry Hamrakulov. To date, it is obvious that in the future business model of Citigroup will be focused on the classical banking business, argues the chief economist of the Criminal Code, "Rus-Capital" Alex Logvin: "I think it was a key part of the rehabilitation strategy, coordinated with state authorities the United States. After all, Citi is a system- bank in the region, his forte is the extensive network of about 12 thousand branches.