Citigroup Inc., in the midst of a plan to shed $400 billion of assets before 2012, completed the sale of its German retail banking business Friday.
The $2.1 trillion-asset Citi sold the operation to Credit Mutuel-CIC, a French banking company based in Paris, for $6.7 billion.
The New York-based Citi, which secured a $20 billion federal bailout last month to help it absorb mortgage-related losses after a year of operating in the red, is aggressively moving to shore up capital. Citi said in a press release announcing the sale's closing that it would realize an after-tax gain of about $4 billion. The proceeds also will add about 60 basis points to Citi's Tier 1 capital ratio, which was 8.2% at the end of the third quarter.
The operation sold to Credit Mutuel-CIC has assets of $15.6 billion and deposits of $11.8 billion at current foreign exchange rates. It has 3.25 million customers, 6,800 employees, and 340 sites, including branches and advisory centers, throughout Germany. The two companies agreed that Credit Mutuel-CIC will operate the acquired business under the Citibank brand until a rebranding scheduled for 2010.
"The transaction is another strategic step that significantly strengthens Citi's key capital ratios and allows us to reallocate capital to the best growth opportunities for the overall franchise," Citi chief executive Vikram Pandit said in a press release.
"We are especially pleased the franchise and employees remain in good hands to serve our retail banking customers in the future."
The deal was initially announced in July.