Citigroup may unveil $400 bn asset sales

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Saturday , May 10, 2008 at 0041 hrs Citigroup Inc, hit hard by the global crunch, will announce plans to sell roughly $400 billion of non-core assets when it meets investors and analysts on Friday, people familiar with the situation said.

Newly-installed chief executive Vikram Pandit, scrambling to slash Citi's costs and overcome credit market problems, also intends to reaffirm his promise to cut annual expenses at the largest US bank by about 20%, one of the sources said. But Citigroup declined to comment. The sales could amount to nearly 20% of Citi's current assets and would take place over several years.

“This sounds like the beginning of a fairly long and ambitious process of house-keeping,” said Tim Hughes, head of sales trading at IG Index in London. “Companies like Citi can get too much of a good thing in terms of diversification, and lose focus on what they are actually doing.” Although Citi has said previously that it plans to shed assets to boost its capital position, the magnitude of the sales worried analysts and is likely to prompt fresh speculation of a potential break-up of the Wall Street giant. Pandit and other executives are expected to fend off fresh calls for a break-up on Friday, when the company offers a four-hour presentation to investors and analysts.

“The only reason you'd sell off that many assets is you have a lot more losses coming than you originally thought,” said Jim Huguet, co-chief executive at fund manager Great Companies LLC. Since late last year, Citi has recorded more than $45 billion of writedowns and credit losses, raised more than $40 billion of new capital including $2 billion of preferred shares this week, and slashed its dividend 41%.