This morning Citigroup and ABN Amro announced the sale of ABN Amro's Mortgage Group to Citigroup for an undisclosed sum. The deal will give CitiMortgage Inc. another 1.5 million customers while adding another 2,500 wholesale brokers to its operations making it the fourth largest U.S. mortgage loan services company as well as the third largest originator of loans. ABN Amro explained the deal would help it to focus on the mid-market client segment. While neither company disclosed the terms of the sale, analysts at Keefe Bruyette and Woods estimated ABN Amro will record a gain of around $200 million, while UBS analyst Michael Schenk believes that with the housing bottom possibly in place, "ABN risks, after years of refusing to sell this business, having sold this business at the bottom." Schenk estimates Citigroup is paying $3 billion for the unit.
• Sources: Press Release, Reuters, MarketWatch
• Related commentary: Housing Stocks: Is the Worst Over?, Real Estate Gauge: Private Residential Investment as a Percentage of GDP
• Potentially impacted stocks and ETFs: Citigroup (C), ABN Amro (ABN). ETFs: iShares Cohen & Steers Realty Maj. (ICF)
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