Citi Sale
Citigroup has sold a majority stake in Smith Barney for $2.7 billion in cash in return for a 51% share in the Joint Venture (creating the world's biggest wealth manager with $1.7 trillion in client assets). Citi is expected to reveal up to $10bn in losses on Jan 22 when it releases figures for Q4 2008, including a$5bn credit-value adjustment on derivative positions, excluding monolines.
Deal Rationale
The JV is expected to achieve cost savings of about $11bn, partly by rationalizing and consolidating key functions e.g. technology, operations, support, product development and marketing, which consitute approximately 15% of the combined firm's expense base (excluding FinAdvisor commission compensation).
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