The case against a Citigroup break up

Thu, 15 May 2008 06:59:57 -0400

A post at Naked Capitalism makes some astute points about the value of a Citigroup break up. A break up only makes sense if parts can be sold in a way that improves the capital position of the remaining entity. Given current valuations, that does not seem likely. Indeed, it's a good bet that Vikram Pandit explored various break up-type scenarios and concluded that the gains just aren't there. The post also notes that a break up is a fairly complex endeavor given the degree of current integration. A lot have combined overhead. It would amount to "a full employment act for a hoard of consultants, accountants, and bankers." So where does this leave Citigroup? Well, some think a turnaround is impossible. For now, the best it can do is get its capital in order. That may mean hitting the streets again with hat in hand.

For more:
- here's the post