After getting a huge pressure from regulators Citigroup’s CEO Mr. Vikram Pandit has decided to divide this banking company into two. Citicorp and Citi Holdings would be the names of the parts. Mr. Pandit told that he believes there is a lot of value in having them (Citicorp and Citi Holdings) focused and also said that they are not in a rush to sell businesses. Mr. Pandit is also agreed to start a joint venture with Morgan Stanley to raise their capital for cover up huge losses in last fourth quarter.
Citigroup’s big loss of 9.8 billion dollars for last quarter and share prices has gone down as low as $1.72 per share. Citigroup would break even on a per share basis according to analysts. Citigroup declared of their big loss for five consecutive quarters and on 16th Jan, 2009 announced that a staggering 25.2 billion dollars in write-offs and losses in both its consumer and investment bank brought its total charges to 90 billion US dollars. The company reported a net loss of 18.72 billion US dollars.
In this situation Mr. Pandit still believes that the Group’s big consumer business was bending the curve on losses. He said the overall company will emerge smarter and stronger from the current environment.
Citigroup will legally remain intact for now. But by segmenting Citigroup into Citicorp and Citi Holdings, run by separate managers, Mr. Pandit may be setting the stage for a spin-off of Citigroup’s stronger operations or an eventual merger. It posted US $5.6 billion in revenue, down 13 percent from the comparable quarter a year earlier, which the company said was a reflection of the difficult economic environment and weak capital markets.