Citigroup to Sell Stake in Smith Barney to Morgan Stanley
Posted on | September 21, 2009 | No Comments
Citigroup CEO Vikram Pandit says that the major financial firm plans to “eventually” sell its stake in Smith Barney to Morgan Stanley. Morgan Stanley currently owns the other 50% of Smith Barney. Currently Smith Barney is a division of Citigroup Capital Markets and its one of the largest brokerages in the United States. Smith Barney joined the Citigroup family when Citicorp merged with Travellers which owned Smith Barney to create Citigroup in 1998.
In January of 2009 Citigroup announced that Morgan Stanley would acquire a 51 percent stake in Smith Barney and it would merge with Morgan Stanley’s Global Wealth Management Group. In the deal Morgan Stanley paid $2.7 billion. From American Banking News: “The combined entity, Morgan Stanley Smith Barney, now services about 6.8 million households, has 18,500 financial advisors, and about $14 billion in net revenue. With over 18,500 financial advisors, Morgan Stanley Smith Barney is now one of the largest wealth management and brokerage firms in the United States.”
Many analysts have predicted that Citigroup would eventually sell the 49% stake in Smith Barney but Pandit’s comments are the first time that Citigroup has made any public statement. Citigroup has seen some major struggles since the beginning of the credit crisis and they have sold off many significant assets. This is likely to continue as Citigroup plans to focus on what made them the major bank they were: traditional retail banking.
This move should greatly help Citigroup regain its focus. During the subprime mortgage crisis many major flaws in Citigroup were revealed. It has taken them some time to analyze these flaws and decide what was part of their core business. In 2009 and 2010, it is expected that Citigroup will continue to do major analysis. It is likely we will see Citigroup sell of other significant assets in the near future.
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Author: Jesse Wojdylo
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