Citi Nearing Sale of India Retail Business and China Assets

Global financial services provider Citigroup, Inc. (C) is streamlining its business with the strategic sale of non-performing assets and business units.

Shares of Citi closed down 1.3% at $66.93 on January 14 after the company reported upbeat fourth-quarter results, but warned of cost worries.

Sale of Non-Strategic Businesses

Recently, Citi announced the sale of its consumer banking franchises in four countries including Indonesia, Malaysia, Thailand, and Vietnam in an all-cash deal to UOB Group (UOB).

In a similar move, Citi is nearing deals for the sale of both Citi India’s consumer banking business and mainland China’s consumer banking business.

India Consumer Business

According to a Reuters report, Citi is nearing a deal to sell its India consumer business to Axis Bank for $1.5 billion. The deal is expected to close as early as this month.

Citi’s India consumer business has over 2.5 million customers and more than 1.2 million bank accounts. It offers services including credit cards, retail banking, home loans, and wealth management. 

The other contender in the race was India’s Kotak Mahindra Bank, whose bid was reportedly less aggressive than Axis Banks.

Mainland China Consumer Business

According to a Bloomberg report, Citi is nearing a deal with Taiwan’s Fubon Financial Holding Co. for the sale of its mainland China consumer business. The deal is under negotiation and the business is valued at $1.5 billion. Should the deal get through, the documents could be signed in the coming weeks.

Fubon is Taiwan’s leading financial holding company and has also marked its presence in the Chinese mainland with the acquisition of Shanghai-based First Sino Bank in 2014. The Citi deal would strategically bolster Fubon’s presence in the Chinese market.

Analysts’ Take

Following Citi’s Q4 results, BMO Capital analyst James Fotheringham lowered the price target on the stock to $83 (24% upside potential to current levels) from $85 while maintaining a Buy rating.

Fotheringham said, “Despite Citi’s core in-line 4Q21 result, we lower our forward estimates by as much as 4% (primarily due to higher expected operating costs) … C is making significant changes to its existing footprint, exiting consumer banking in Mexico and 13 Asian markets, to release $12 billion of capital.”

The analyst is excited about Citi’s path ahead and looks forward to the investor day scheduled for March 2, 2022.

Overall, the stock has a Moderate Buy consensus rating based on 9 Buys and 7 Holds. At the time of writing, the average Citigroup price target of $78.59 implies 17.4% upside potential to current levels. Shares have gained 8.3% over the past year.

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