Capital Markets Assurance Corp., the structured finance subsidiary of Citibank, yesterday was the object of intensified rumors that the firm would be sold to raised cash for the beleaguered bank.

Over the past several months, Capital Markets has been offered to institutional investors and municipal bond insurers, though to date no party has stepped forward, according to market sources.

Investors entertaining the offers have included property and casualty insurers in various parts of the country. One source close to purchase negotiations said the price being asked by Citibank was about 1.4 to 1.5 times book value.

A rough estimate of the asking price is $350 million, although sources said that price is likely to be chipped away before a deal is concluded.

A spokesman at Citibank declined to comment on specific sales of assets and reiterated the bank's stated intentions to focus on core consumer businesses international finance.

"We are not identifying which businesses are considered for sale," he said.

Militating against the immediate sale of Capital Markets are a fairly high overhead, a relatively short book of business -- much of the insured portfolio is due to mature in the next several years -- and a marginal competitive position, according to structured finance sources.

On the other hand, a source close to the firm said an offer being entertained currently would bode very well for the employees for the company.

Earlier this year, Citibank sold a 50.3% stake in AMBAC Indemnity Corp. -- Capital Market's sister company -- to raise $352 million of capital.

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