Citigroup 'bad bank' separated in theory only

The Financial Times reported that Citigroup's plan to break itself up by separating higher risk US consumer finance and securities businesses from its global commercial banking operations would place unwanted assets and businesses worth more than US$600 billion - a third of its balance sheet - into a "non-core" unit to isolate them from healthier parts of the company.

The FT reported the new unit would remain on the company's books but its results would be reported separately from the rest of the business in an effort to convince investors of the company's viability. The non-core unit could be eventually sold in parts or as a whole or spun off once market conditions improved.

Citi would, however, seek to dispose of some of the risky securities and consumer finance businesses, including sub-prime mortgages and the Primerica door-to-door insurance salesforce, purchased through the 1998 merger with Travelers (an insurance group and since largely sold).