Citigroup Selling Argentinean Retail Operations To Santander?

In sync with its efforts to streamline operations, Citigroup Inc. (NYSE:C) has likely sold its Argentinean retail operations to Spain-based Banco Santander (MC:SAN), S.A. (NYSE:SAN) . Though there is no official confirmation about the deal, the Argentinean newspaper La Nacion first disclosed this news.

Though the financial terms have not been revealed, the operations are projected to be worth around $200–$300 million. Moreover, Citigroup will continue to remain in charge of its corporate business entity in Argentina, which account for 90% of its profits from the country.

Following this deal, Santander will become the largest private bank in Argentina and contribute to its goal of opening 500 branches in the country. The firm was able to outbid other contenders for Citigroup’s Argentina operations.

Why Citigroup Divested the Unit

In Feb 2016, Citigroup had announced its plans to reduce footprints in Brazil, Argentina and Colombia, in line with its strategy of minimizing its international operations. The bank intends to transfer its retail banking and credit card operations to Citi Holdings from Citicorp.

Citi CEO Michael Corbat said, "While our Consumer businesses in Brazil, Argentina and Colombia are of high quality, we have decided to focus our efforts on opportunities with our institutional clients in these countries and throughout the wider region. Citi is committed to Latin America, where we have operated for over a century and built an unmatched network across 23 countries”.

Corbat further added, “We allocate our resources where they can generate the best possible returns for our shareholders. These actions will further simplify our Global Consumer Bank, allowing us to more effectively deploy resources to where we have the ability to achieve scale within our targeted segments and see the greatest opportunity for growth.”

What Next?

Citigroup has been restructuring its operations over the past few years. The company is consistently trying to lower assets and businesses in Citi Holdings.

As mentioned above, Citigroup intends to sell its Brazilian and Colombian operations. Per a report in Valor Economico last week, Banco Santander Brasil SA and Itaú Unibanco Holding S.A. (NYSE:ITUB) are the final bidders to buy its Brazilian retail banking operations. Further, according to the Globe and Mail, the Ontario Teachers’ Pension Plan and several North American private-equity firms are bidders to the company’s Canadian subprime-lending business, CitiFinancial Canada.

Driven by the efforts to shrink its non-core assets, Citigroup will be able to free up capital for investment in its core businesses and its risk profile will also improve. Notably, at the end of second-quarter 2016, Citi Holdings’ assets plummeted 47% year over year and represented just 4% of the company’s total assets.

Currently, Citigroup carries a Zacks Rank #3 (Hold). A better-ranked major regional bank is Comerica Inc. (NYSE:CMA) , with Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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BANCO SANTAN SA (SAN): Free Stock Analysis Report

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