Citigroup to split as losses grow - BBC News

Struggling US banking giant Citigroup has announced plans to split the firm in two, as it reported a quarterly loss of $8.29bn (£5.6bn).
It said it would realign into two new firms, Citicorp and Citi Holdings.
Citicorp will handle the company's traditional banking work, while Citi Holdings will take on the firm's riskiest investment assets.
Last autumn, Citigroup had to be rescued by the US government in a bail-out deal totalling $45bn.
The government also agreed to guarantee up to $306bn (£205bn) of risky loans and securities on Citigroup's books.
'Ongoing efforts'
"Given the economic and market environment, we have decided to accelerate the implementation of our strategy to focus on our core businesses," said Citigroup chief executive Vikram Pandit. "This will help in our ongoing efforts to reduce our balance sheet and simplify our organisation. "We are setting out a clear roadmap to restore profitability." Citigroup's net loss for the last three months of 2008 works out at $1.72 per share, worse than analyst expectations of $1.31.
Its quarterly revenues were down 13% to $5.6bn, which Citigroup said reflected "the impact of a difficult economic environment and weak capital markets".
"I think people knew it was going to be bad, but I'm surprised it's this bad," said Matt McCormick, portfolio manager at Bahl & Gaynor Investment Counsel in Cincinnati.
Analysts say the split essentially puts Citigroup's solid and profitable consumer banking interests in the hands of the new Citicorp, while the bad investment debts that forced it to seek government help go into Citi Holdings.
This will enable Citicorp to return to profitability much quicker than would have been possible for Citigroup as a single firm.
Citicorp - to have responsibility for universal banking operations
Citi Holdings - to take on the firm's brokerage and investment interests, and a special pool of loss-making assets
Meanwhile, the bosses at Citi Holdings will have the arduous task of sorting through the mass of bad debt, picking out what can be salvaged.
Citigroup said it was now looking for a "strong manager" to head Citi Holdings.
Redundancies
For 2008 as a whole, the bank made a net loss of $18.72bn.
It blamed the losses on having to write-off bad debt and the cost of making redundancies.