Citigroup Sells German Arm for $6.7 Billion

French mutual bank CM-CIC finalised a deal to buy Citibank Germany as part of the U.S. group's drive to sell hundreds of billions of dollars worth of assets after losses piled up from the subprime crisis.

Citigroup , the largest U.S. bank, said on Friday the French bank was paying 5.2 billion euros ($6.7 billion) in cash, giving it an after-tax gain of some $4.0 billion on the disposal.

The deal was first announced in July when CM-CIC said it would pay 4.9 billion euros plus the German bank's further 2008 earnings. Citibank Deutschland has 3.25 million clients and has a market share of over 7 percent in Europe's largest economy.

The group said that with the buy of Citibank Deutschland and by taking control of Cofidis in France, it now had the means to develop consumer credit expertise in France and the rest of Europe.

Credit-Mutuel-CIC has 3,400 agencies in France. Citigroup sadi its Tier 1 capital ratio for the third quarter ended Sept. 30, 2008 on a pro-forma basis for the close of the transaction is expected to be higher by some 60 basis points.

"The transaction is another strategic step that significantly strengthens Citi's key capital ratios and allows us to reallocate capital to the best growth opportunities for the overall franchise," Citi CEO Vikram Pandit said in a statement, adding Germany remained an important market for Citi's institutional clients business.

The operations sold to Credit Mutuel-CIC have assets of $15.6 billion and deposits of $11.8 billion at current foreign exchange rates. Credit Mutuel-CIC will operate the acquired business under the Citibank brand until it undergoes a rebranding in 2010.

Citibank Deutschland makes its money by lending for everything from televisions to cars and also has a credit card business as well as an arm which provides investment advice to wealthy customers. Citigroup's roots in Germany go back to 1926.

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