Citi may put non-core biz on the block
The Citigroup is set to shed its non-core consumer and vehicle finance subsidiaries in India, as part of its CEO Vikram Pandit’s plans to focus on core assets, reports HT Correspondent.india Updated: Jan 18, 2009 21:01 IST
The Citigroup, which last week reorganised its global businesses into core and non-core units, is set to shed its non-core consumer and vehicle finance subsidiaries in India, as part of its CEO Vikram Pandit’s plans to focus on core assets.
Citifinancial Consumer Finance India, which is in the business of providing personal loans, and Citicorp Finance India, which finances old and new commercial vehicles, are expected to be on the block.
The core unit includes corporate and investment banking, commercial banking and cards businesses, while the non-core includes brokerage and asset management, local consumer finance units like the Cifitinancial and $300 billion of toxic mortgage assets in the US.
Both consumer and vehicle financing businesses in India are beset with high loan defaults. Citicorp Finance India also owns a 74 per cent stake in Citicorp Maruti Finance, a firm that provides financing for purchase of Maruti Suzuki cars.
Citigroup India did not want to comment on the possible options for these businesses on a mail sent on last Friday.
Industry sources however, said Citigroup has a tough task at hand in its effort to get rid of local businesses due to the current market condition.
Citigroup on Friday reported a loss of $8.3 billion in the quarter ended December 31. Consumer loan defaults in India were the primary reason for its Asian consumer banking business to report a 66 basis points rise in defaults to 1.48 per cent.
Corporate and investment banking businesses in India deliver high profits for Citigroup. Of the Rs 1,800 crore profit Citigroup India reported in 2007-08, almost 80 per cent came from corporate-related businesses.