Citigroup Stripping Away a Third of Business Entities

Amid speculation that it could announce a $10-billion (U.S.) quarterly operating loss next week, Citigroup agreed to swap Smith Barney, viewed as one of its top businesses and a cash cow, for a 49-per-cent stake in the new Morgan Stanley Smith Barney and a $2.7-billion upfront cash payment.

Now it's reportedly considering a further overhaul to slim down and refocus. The plan, expected to be announced this month, could mark the end of the bank's ambitions to be a one-stop shop for financial services.

Citigroup will also announce steps to shed two consumer-finance units and the company's private-label credit-card business, and scale back on the trading the company does on its own behalf.

People close to the situation said Citi would place unwanted assets and businesses worth more than $600bn – a third of its balance sheet – into a “non-core” unit to isolate them from healthier parts of the company.