Citibank Says It Won't Sell 'Strategic' Brazil Operations, Suspicion Ensues

Citibank Brazil (C) announced once again Friday that the bank will not sell out, despite the worst financial crisis in its 197 years of operation.

Citibank has been profitable in Brazil, and said that its Brazilian operation has “strategic importance” for the company. Analysts do not discount the fact that Citi will have to sell its Brazilian operation, one of the few that has interested buyers at this time. Bradesco (BBD) is especially interested in the adquistion, after losing its leading position in rankings after the merger of Unibanco and Itaú.

A constant target of rumors regarding acquisition, Brazilian Citibank accumulated profits of U.S. $1.297 billion from January to September of 2008 (last release), a change of -12% from the same period in 2007.

In addition to a major presence in high-income retail, Brazilian Citi is one of the leaders in corporate banking, currency exchange, cash management, and issuing of credit cards. The bank has assets totaling $40 billion and ranks as the 10^th largest in the country. It has 127 branches and employs 5,911 people. Its credit portfolio, however, is one of the lowest among commerce banks, totaling $7.1 billion.

The bank said in a letter:

According [to] the realignment announcement made today, Brazil was confirmed as a strategic country for the company and for the future of Citi within the new structure of Citigroup. There is no intention to sell the business in Brazil.

According to Citi, the changes announced Friday will have no impact within Brazil, but the market reacted with suspicion. The bank has not yet revealed the future for its finance company, Citi Financial within the country.

Citi approved the merger of its brokerage, Smith Barney with the brokerage Morgan Stanley (MS).

Besides the bank, Citigroup still owns a 17% stake in Redecard, a credit card processing company, with an estimate worth of U.S. $3 billion. Redecard shares had a low of 4.66% on Friday.

Comments

[JACK RIPPER:]

Have you forgotten that about 6 years ago 2 citi vice-pres bought up public corps in Brazil, unloaded them and made a fortune?

Sep 04 11:16 AM