Citigroup unloads German bank

Citigroup is selling its German retail-banking operation to Paris-based Credit Mutuel for $7.7 billion.

In an attempt to shore up its capital after suffering billions in subprime-related losses, Citigroup Inc. announced today that it is selling its German retail-banking operation to Paris-based Credit Mutuel for $7.7 billion.

Citigroup’s sale of Citibank Privatkunden AG & Co. KGAA is expected to close in the fourth quarter and would involve Credit Mutuel paying $7.7 billion in cash on top of earnings the consumer banking unit accrues this year through the closing.

The transaction is expected to give New York-based Citigroup an estimated after-tax gain of $4 billion, the bank said in a statement.

Selling off the Dusseldorf, Germany-based Citibank unit is part of Citigroup’s plan, announced in early May, to unload around $500 billion in non-core business assets over the next few years to enhance its capital base (InvestmentNews May 9).
The investment bank has posted two consecutive quarterly losses and incurred $13.9 billion in write-downs in the first quarter stemming from the credit crunch (InvestmentNews April 18).