Citibank 2008 Annual Report Download - page 142

3. DISCONTINUED OPERATIONS
Sale of Citigroup’s German Retail Banking Operations
On December 5, 2008, Citigroup sold its German retail banking operations to
Credit Mutuel for Euro 5.2 billion, in cash plus the German retail bank’s
operating net earnings accrued in 2008 through the closing. The sale
resulted in an after-tax gain of approximately $3.9 billion including the
after-tax gain on the foreign currency hedge of $383 million recognized
during the fourth quarter of 2008.
The sale does not include the corporate and investment banking business
or the Germany-based European data center.
The German retail banking operations had total assets and total liabilities
as of November 30, 2008, of $15.6 billion and $11.8 billion, respectively.
Results for all of the German retail banking businesses sold, as well as the
net gain recognized in 2008 from this sale, are reported as Discontinued
operations for all periods presented.
Summarized financial information for Discontinued operations,
including cash flows, related to the sale of the German retail banking
operations is as follows:
In millions of dollars 2008 2007 2006
Total revenues, net of interest expense $ 6,592 $ 2,212 $ 2,126
Income from discontinued operations $ 1,438 $ 652 $ 837
Gain on sale 3,695 ——
Provision for income taxes and minority interest,
net of taxes 426 214 266
Income from discontinued operations, net of
taxes $ 4,707 $ 438 $ 571
In millions of dollars 2008 2007 2006
Cash flows from operating activities $ (4,719) $ 2,227 $ 2,246
Cash flows from investing activities 18,547 (1,906) (3,316)
Cash flows from financing activities (14,226) (213) 1,147
Net cash provided by (used in) discontinued
operations $ (398) $ 108 $ 77
CitiCapital
On July 31, 2008, Citigroup sold substantially all of CitiCapital, the
equipment finance unit in North America. The total proceeds from the
transaction were approximately $12.5 billion and resulted in an after-tax
loss to Citigroup of $305 million. This loss is included in Income from
discontinued operations on the Company’s Consolidated Statement of
Income for the second quarter of 2008. The assets and liabilities for
CitiCapital totaled approximately $12.9 billion and $0.5 billion, respectively,
at June 30, 2008.
This transaction encompassed seven CitiCapital equipment finance business
lines, including Healthcare Finance, Private Label Equipment Finance,
Material Handling Finance, Franchise Finance, Construction Equipment
Finance, Bankers Leasing, and CitiCapital Canada. CitiCapital’s Tax Exempt
Finance business was not part of the transaction and was retained by Citigroup.
CitiCapital had approximately 1,400 employees and 160,000 customers
throughout North America.
Results for all of the CitiCapital businesses sold, as well as the net loss
recognized in 2008 from this sale, are reported as Discontinued operations
for all periods presented.
Summarized financial information for Discontinued operations,
including cash flows, related to the sale of CitiCapital is as follows:
In millions of dollars 2008 2007 2006
Total revenues, net of interest expense $ 24 $ 991 $ 1,162
Income (loss) from discontinued operations $40 $ 273 $ 313
Loss on sale (506) ——
Provision (benefit) for income taxes and minority
interest, net of taxes (202) 83 86
Income (loss) from discontinued operations, net
of taxes $(264) $ 190 $ 227
In millions of dollars 2008 2007 2006
Cash flows from operating activities $(287) $(1,148) $ 2,596
Cash flows from investing activities 349 1,190 (2,664)
Cash flows from financing activities (61) (43) 3
Net cash provided by (used in) discontinued
operations $ 1 $ (1) $ (65)
Sale of the Asset Management Business
On December 1, 2005, the Company completed the sale of substantially all of
its Asset Management business to Legg Mason, Inc. (Legg Mason).
On January 31, 2006, the Company completed the sale of its Asset
Management business within Bank Handlowy (an indirect banking
subsidiary of Citigroup located in Poland) to Legg Mason. This transaction,
which was originally part of the overall Asset Management business sold to
Legg Mason on December 1, 2005, was postponed due to delays in obtaining
local regulatory approval. A gain from this sale of $18 million after-tax and
minority interest ($31 million pretax and minority interest) was recognized
in the first quarter of 2006 in Discontinued operations.
During March 2006, the Company sold 10.3 million shares of Legg Mason
stock through an underwritten public offering. The net sale proceeds of
$1.258 billion resulted in a pretax gain of $24 million in ICG.
In September 2006, the Company received from Legg Mason the final
closing adjustment payment related to this sale. This payment resulted in an
additional after-tax gain of $51 million ($83 million pretax), recorded in
Discontinued operations.
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