Most of
Citigroup 's (NYSE: C) press releases,
earnings reports, conference calls, and investor
presentations over the past year have said something along
the lines of, "Yeah, the U.S. is a black hole. But our
international units are killing it! Profits galore!"
This,
we're told, is Citi's niche in the banking world: A truly
globalbank. And international banking is supposed to
be where all the fun is. "We are seeing further confirmation
of signs [of] improvement in our international markets, but
challenges remain in the U.S.," said CEO Vikram Pandit last
week.
Which makes it all the more agonizing to hear Citigroup
might have to shed one of its cherished international
divisions: the Mexican banking unit, Banamex.
According to
The
Financial Times, the Mexican government is honing in
on a law that prohibits state-owned banks from operating in
Mexico. Since Citigroup is now officially more than 30% owned
by U.S. taxpayers, it could fall squarely under that rule,
meaning the Citigroup mothership may have to ditch
Banamex.
Citigroup doesn't break out Banamex results, but the
Financial Timessuggests that it makes up as much as
15% of Citigroup's profits, and could be worth upward of $20
billion in a sale.
This, though, presents two problems:
profits-- assets like Banamex.
Saying that a division might be worth $20 billion means
nothing, especially when the government is orchestrating
the matter. Citi just sold its commodities trading unit to
Occidental Petroleum (NYSE: OXY) for $250
million, or
just overone-tenth the $2 billion some suggested it was
worth. Getting a fair price can be quite difficult when
anxious regulators are prodding you to move along.
When the banking world caved in last year, plenty warned
of
zombie banks: those that could be kept alive by
government support, but remain comatose from an unviable
business model. As banks like
Goldman Sachs (NYSE: GS),
Wells Fargo (NYSE: WFC), and
JPMorgan Chase (NYSE: JPM) rebound sharply
and have well-defined niches, we have to ask: Is Citigroup
already stuck in a zombie world?
You tell me. Fire away in the comment section below.
This article was originally published as
No Bueno, Citigroupon
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