Citigroup Inc C 0.2% is getting an early start on its 2015 New Year’s resolutions: trim down the balance sheet, pass the CCAR, and continue to reduce operational risk. The company has made lots of noise recently, shuffling its business and books to eliminate past problems and position itself for a bright future.
A handful of recent transactions are the latest in the metamorphosis of Citigroup from the pre-crisis bloated megabank with the bad balance sheet to the smaller, streamlined Citigroup of the future.
Determined Not To Make The Same Mistake Twice
Citigroup took a hard blow in 2014 when its capital return plan was rejected by the Federal Reserve.
Morgan Stanley analysts believe that Citi can’t and won’t risk another rejection in 2015. They believe that Citi will continue to focus on getting rid of its subprime lending business, reducing risky international positions, boosting capital ratios and cutting expenses.
Recent Transactions
Three recent moves by Citigroup suggest that the company is still actively adjusting its business. As Morgan Stanley analysts predicted, Citigroup recently sold two of its international positions. Citi reached a deal with The Bank of Nova Scotia BNS 0.61% for Citigroup to turn over its commercial banking operations in Peru.
In addition, Citi will be selling its retail banking operations in Japan to Sumitomo Mitsui Financial Group Inc SMFG 0.27% in a deal that is expected to close in 2015.
It’s Not Just About Selling
Citigroup’s balance sheet makeover is not only about selling. Citigroup recently purchased Credit Suisse Group AG’s CS 0.86% commodities business. Citigroup will be taking over Credit Suisse’s trading of base and precious metals, freight, coal, iron ore, crude oil, oil products and U.S. and European natural gas.
Overall, Citigroup’s efforts…
Read the rest of this article (and all my other articles) for free on Benzinga by clicking here
Want to learn more about the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
