Citigroup’s quest to raise cash by selling the assets it doesn’t want is falling flat, as would-be suitors have more interest in the parts of the business that Citi would like to keep.
One investor on the prowl is Texas billionaire Gerald J. Ford, who sources said is interested in buying back bank assets and branches that make up the former Golden State Bancorp, a Glendale, Calif.-based savings and loan that Citi bought from Ford seven years ago for nearly $6 billion.
Potential buyers are also interested in Mexican bank Banamex, which Citi bought for $12.5 billion eight years ago.
Problem is, the old Golden State assets and Banamex have been ring-fenced into Citi’s so-called good bank, Citicorp, which contains assets and businesses that the hobbled banking giant wants to keep.
Meanwhile, the assets that make up Citi’s so-called bad bank, businesses that are seen as non-core and are at the heart of a strategy to raise much-needed capital, are garnering little interest, investment bankers told The Post. The assets include CitiFinancial, CitiMortgage and Primerica, which has been for sale for more than a year.
Sources said those businesses aren’t drawing buyers because they are in sectors that face the strongest headwinds these days.
Citi has been under intense pressure to right its ship after losses totaling nearly $30 billion forced the bank to grab a $45 billion lifeline from Uncle Sam and batten down its hatches.
But even with the rescue cash, there are many who believe Citi and other consumer-focused lenders will see additional losses on credit cards and auto loans, pushing already-wounded banks deeper into the red.
Citi’s difficulty in selling its non-core assets underscores how difficult it might be for the bank to keep the businesses it considers its crown jewels.
To be sure, it’s unclear how strongly Ford, whose net worth is $1.4 billion, according to Forbes, is interested in Golden State. It’s also unclear how easily Citi could carve out the Golden State assets if it was interested in striking a deal with Ford.
In terms of size, Golden State was second only to Washington Mutual when Citi bought the thrift, which also owned First Nationwide Mortgage – the country’s eighth-largest mortgage lender at the time.
Meanwhile, rumors south of the border have been floating that potential investors, including Manuel Medina Mora, Citi’s head of Latin American operations, are trying to raise funds to purchase Banamex.
But in a statement to The Wall Street Journal, Medina Mora tried to throw cold water on that speculation. “I emphatically deny I am looking to raise funds to purchase Banamex,” he said.