Citigroup May Sell German Retail Unit to Raise Cash

Citigroup May Sell German Retail Unit to Raise Cash

May 16 (Bloomberg) -- Citigroup Inc., reeling from record losses, may sell its consumer-banking unit in Germany as part of Chief Executive Officer Vikram Pandit's plan to replenish capital.

Citigroup is exploring ``a variety of options for our retail banking business in Germany,'' Bjoern Korschinowski, a spokesman for Dusseldorf-based Citibank Privatkunden AG, said in a statement today. The German retail unit could fetch 5 billion euros ($7.8 billion) to 6 billion euros, according to Dirk Becker, an analyst at Landsbanki Kepler in Frankfurt.

Pandit said earlier this month he plans to get rid of about $400 billion of assets over the next three years. The German retail unit, with about 340 branches and the biggest consumer- lending business in Germany, had 2007 net income of 365 million euros, down 16 percent, it said April 24.

``Consumer loans is one of the retail segments with the highest margins in Germany despite increasing competition,'' Becker said. ``I expect a lot of bidders.''

Pandit, who succeeded Charles O. ``Chuck'' Prince in December, said he'll sell assets including real estate holdings and collateralized debt obligations, such as bonds backed by pools of subprime mortgages. Analysts predict he'll sell life insurer Primerica Corp. Other options include exiting Brazilian retail banking and trimming operations in Asia.

Citigroup's German unit has about 6,800 employees and 3.2 million customers. The company said it's one of the country's largest credit-card issuers and offers wealth management services and checking accounts.

`No Decision'

``No decisions have been made at this time'' about a sale of the German unit, and a deal wouldn't include corporate and investment banking operations in Germany, Korschinowski said.

The possible sale of Deutsche Postbank AG and Citibank has raised speculation about a wave of takeovers that could involve many of the country's biggest banks.

Postbank's majority owner Deutsche Post AG has said it's assessing a possible sale of Germany's biggest retail bank with more than 14.5 million customers. Deutsche Bank AG and Commerzbank AG, Germany's biggest banks, have both expressed their interest.

Commerzbank said yesterday it ``would closely watch'' should Citigroup decide to sell its German retail unit.

Deutsche Bank would also be interested in Citigroup's German consumer banking operations, Juergen Fitschen, a group executive committee member, said on April 25. The lender has expanded in consumer banking by purchasing German lenders Norisbank and Berliner Bank for 1.1 billion euros in 2006.

BLOOMBERG