Just a few weeks after selling the student lending business at a $500 million loss, Citigroup agreed to sell about $1.6 billion of private-label credit card loans to GE Capital. This sale is coming from Citigroup attempting to move away from small businesses so that it may focus on its core consumer banking operations. Citigroup also claimed that the sale was not material to its earnings but would reduce the bank’s overall assets by $1.6 billion. By the end of 2010, Citigroup plans on selling half of the troubled assets it deemed nonessential. Citigroup was one of the top recipients of federal bailout aid, and as such has decided to restructure operations as so that it may recover from this credit crisis. The credit card portfolio services more than 40 million customers and consists of about $50 billion in managed assets. These assets include cards for retailers such as Home Depot Inc. and Macy's. Citigroup Inc. will service the portfolio until the first quarter
This “shedding” of credit card loans is a sign that Citigroup is trying to improve their current state after being bailed out. Are they doing it the right way though? Their last attempt left them with a 500million dollar loss. I think if Citigroup is looking to get out of their predicament they need to step back and re-access where they stand and what they need to do to improve.
http://online.wsj.com/article/AP08898d6555ce4945b0079a6df1ecf0bc.html?KEYWORDS=consumer+banking
I couldn't agree more. Citigroup certainly needs to re-assess their portfolio and make some cuts in areas where they are clearly not specializing. I believe that Citigroup's best bet is indeed capitalizing on their consumer banking operations. Their recent announcement to introduce the G2 credit card clearly shows that they are leading in innovation, and they have a growing consumer base. Consumer banking is a safe bet that Citigroup should seriously invest more time in, especially given its poor financial record.
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