A Year Into Citi’s Confused Breakup

  • Share
  • Read Later

Back in October, I wrote that Citi was basically a big garage sale, willing to sell any part of the bank that wasn’t nailed down (they had already gotten rid of the nailed down stuff). At the time, the PR folk denied that most of Citi was up for sale. They said the bank had made a detailed and logical plan of what was for sale and what wasn’t. You see all the sales were based on a well reasoned plan of what was strategic for the global bank and what wasn’t.

Well, a little over a year later, Citi has made some progress in getting rid of businesses and raising capital. But the logic of Citi’s sale process has turned positively wacky.

More of that wackiness came out on Monday, when news surfaced that Citi was nearing a deal to sell off a private equity unit, Citi Private Equity.

Other money-management units marked for sale or closure include the Citi Property Investors real-estate unit, which oversees $12.5 billion; and the Hedge Fund Management Group, which allocates money to hedge funds on behalf of its own investors, the people said. . . . . Citigroup plans to keep Metalmark Capital LLC, a buyout firm it agreed to buy for an undisclosed sum in December 2007. Headed by former Morgan Stanley executive Howard Hoffen, 46, Metalmark oversees almost $3.8 billion in several funds, one person said.  . . . . . The bank also is keeping Citi Venture Capital International, which focuses on China, India, Central and Eastern Europe and Latin America.

Citigroup’s hedge-fund and buyout division, Citi Capital Advisors, is run by Jonathan Dorfman, who turns 48 this month, and James O’Brien, 49, another pair of former Morgan Stanley executives . . .

OK, just in case you can’t follow, and who could, Citi is disposing one private equity division, one real estate investment division and one hedge fund investment division. But, at the same time, it is keeping two other private equity divisions (one buyout and one VC) and one other hedge fund division. Felix Salmon over at Reuters says that this type of arbitrary decision making shows how rudderless Citigroup is.

But while I agree that Citi’s sales lack any business logic, they do seem strategic moves from Citi’s CEO Vikram Pandit on another front–his effort to keep his job. And the moves may signal that Pandit may be even closer to being kicked to the curb than many think. As you can see, the key input what divisions Pandit is keeping and which ones he is jettisoning is how well the manager of that business knows Pandit. Looks like Pandit doesn’t want to keep anyone around who might tattle to the board of directors that things are not going along as planned. Making business decisions based on loyalty? Seems like another sign that we may be seeing a new Citi CEO sometime soon.

0 comments
Sort: Newest | Oldest