Citicorp's Italian Bank Unit Fetches Price of $276 Million
LONDON -- Making a choice between its global ambitions and financial realities, Citicorp announced Friday the sale of its Citibank Italia unit to Banco Ambrosiano Veneto for $276 million in cash.
The sale of the 46-branch Citibank Italia by capital-starved Citicorp marks the first major cut in the bank's vaunted global consumer banking network.
"No doubt about it, they need the capital," said Chris Wheeler, an analyst with Lehman Brothers International in London.
Capital Impact Estimated
Citicorp said Friday that, when the sale is completed, it will have the effect of improving risk-adjusted capital by $125 million.
The price was equivalent to about twice book value of the Citibank unit, said Aldo Palmeri, Citicorp's country corporate officer for Italy.
"It's an excellent deal for everyone involved," the banker said by telephone from Milan.
Citibank Italia has deposits of about $2.2 billion and assets of about $1.7 billion. The unit operates mainly in southern Italy and was formed after Citicorp purchased Banca Centro Sud from the Italian commercial bank Banco di Roma, in 1984.
It specializes in consumer banking and local community banking, including financing smaller businesses.
The announcement follows several weeks of industry speculation in Milan that Ambroveneto, the largest private-sector bank in Italy, as well as Germany's Deutsche Bank AG, were interested in acquiring Citibank Italia.
The transaction relates only to Citicorp's commercial banking activities in Italy.
It will retain its other units that operate in the consumer finance, merchant banking, and securities trading fields.
Keeping Finance Company
This includes the bank's Citifin Spa unit, with assets of $1.5 billion and described as the larger consumer finance company in Italy.
In a statement, the moneycenter bank said while Citibank Italia "has a vital customer base of middle market and retail businesses, the nature of the distribution base does not fit the strategy being pursued by Citibank for its global consumer businesses."
The strategy calls for selective branch locations in major metropolitan areas where consumers can be provided with Citicorp services, it said.
Mr. Palmeri disclosed that, as part of Citicorp's expansion in the securities and investment banking field, it is currently negotiating a joint venture with Credito Italiano to take a "significant stake" in the Italian bank's brokerage arm.
The last major U.S. banking retrenchment in Italy was by BankAmerica Corp, which sold its Banco d'America e d'Italia network to Deutsche Bank in 1986.
Subject to approval by the Italian regulatory authorities, the transaction is expected to close on Nov. 1. [Tabular Data Omitted]
James R. Kraus in New York contributed to this report.