Is Citigroup’s Restructuring Exercise Benefiting the Company?



Citigroup continues to wind down Citi Holdings

Citigroup’s CEO, Michael Corbat, continued his efforts to try to slim down the company’s operations and clean up its balance sheet in the second quarter. It continued to dispose of Citi Holdings assets—considered as “unwanted.” During the quarter, Citi Holdings assets declined 47% from a year ago. At the end of the second quarter, it represented 4% of Citigroup’s total assets. The bank reported that Citi Holdings’ revenues fell 57% due to the continued reduction in assets and lower gains on asset sales. The bank has agreements to sell $7 billion of Citi Holdings assets.

“Nearly all of our net income came from our core businesses and we continued to reduce non-core assets in Citi Holdings,” Corbat said in a statement.

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This move came about after the financial crisis. The company has been getting rid of its unwanted businesses to focus on its core and improve its profitability. This move helped the company reduce costs from legal matters and restructure to its lowest levels in the fourth quarter since 2012. Since then, the company benefited from the surge in mergers and acquisition activity. In some ways, Friday’s results showed the strategy’s positive results. The New York-based bank earned $17.2 billion in 2015—its biggest annual profit since 2006.

Investors seeking exposure to Citigroup can invest in the Financial Select Sector SPDR ETF (XLF) or the iShares US Financials ETF (IYF). Banks like Wells Fargo (WFC), JPMorgan Chase (JPM), and Bank of America (BAC) are also well represented in their portfolios.


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