Citibank 2009 Annual Report Download - page 153

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2. BUSINESS DEVELOPMENTS
ACQUISITIONS
North America
Acquisition of ABN AMRO Mortgage Group
In 2007, Citigroup acquired ABN AMRO Mortgage Group (AAMG), a
subsidiary of LaSalle Bank Corporation and ABN AMRO Bank N.V. AAMG is
a national originator and servicer of prime residential mortgage loans. As
part of this acquisition, Citigroup purchased approximately $12 billion in
assets, including $3 billion of mortgage servicing rights, which resulted in
the addition of approximately 1.5 million servicing customers. Results for
AAMG are included within Citigroup’s North America Regional Consumer
Banking business from March 1, 2007 forward.
Acquisition of Old Lane Partners, L.P.
In 2007, the Company completed the acquisition of Old Lane Partners, L.P.
and Old Lane Partners, GP, LLC (Old Lane). Old Lane is the manager of a
global, multistrategy hedge fund and a private equity fund. Results for Old
Lane are included within ICG, from July 2, 2007 forward.
On June 12, 2008, Citigroup announced the restructuring of Old Lane and
its multistrategy hedge fund (the “Fund”) in anticipation of redemptions
by all unaffiliated, non-Citigroup employee investors. To accomplish this
restructuring, Citigroup purchased substantially all of the assets of the Fund
at fair value on June 30, 2008. The fair value of assets purchased from the
Fund was approximately $6 billion at June 30, 2008.
Acquisition of BISYS
In 2007, the Company completed its acquisition of BISYS Group, Inc.
(BISYS) for $1.47 billion in cash. In addition, BISYS’s shareholders received
$18.2 million in the form of a special dividend paid by BISYS simultaneously.
Citigroup completed the sale of the Retirement and Insurance Services
Divisions of BISYS to affiliates of J.C. Flowers & Co. LLC, making the net
cost of the transaction to Citigroup approximately $800 million. Citigroup
retained the Fund Services and Alternative Investment Services businesses of
BISYS, which provides administrative services for hedge funds, mutual funds
and private equity funds. Results for BISYS are included within Transaction
Services business from August 1, 2007 forward.
Acquisition of Automated Trading Desk
In 2007, Citigroup completed its acquisition of Automated Trading Desk
(ATD), a leader in electronic market making and proprietary trading, for
approximately $680 million ($102.6 million in cash and approximately
11.17 million shares of Citigroup common stock). ATD operates as a unit
of Citigroup’s Global Equities business, adding a network of broker-dealer
customers to Citigroup’s diverse base of institutional, broker-dealer and retail
customers. Results for ATD are included within Citigroup’s Securities and
Banking business from October 3, 2007 forward.
Latin America
Acquisition of Grupo Financiero Uno
In 2007, Citigroup completed its acquisition of Grupo Financiero Uno (GFU),
the largest credit card issuer in Central America, and its affiliates.
The acquisition of GFU, with $2.2 billion in assets, expands the presence
of Citigroup’s Latin America Consumer Banking franchise, enhances its
credit card business in the region and establishes a platform for regional
growth in Consumer Finance and Retail Banking. GFU has more than one
million retail clients and operates a distribution network of 75 branches and
more than 100 mini-branches and points of sale. The results for GFU are
included within Citigroup’s Latin America Regional Consumer Banking
businesses from March 5, 2007 forward.
Acquisition of Grupo Cuscatlán
In 2007, Citigroup completed the acquisition of the subsidiaries of Grupo
Cuscatlán for $1.51 billion ($755 million in cash and 14.2 million shares of
Citigroup common stock) from Corporacion UBC Internacional S.A. Grupo
Cuscatlán is one of the leading financial groups in Central America, with
assets of $5.4 billion, loans of $3.5 billion, and deposits of $3.4 billion.
Grupo Cuscatlán has operations in El Salvador, Guatemala, Costa Rica,
Honduras and Panama. The results of Grupo Cuscatlán are included
from May 11, 2007 forward and are recorded in Latin America Regional
Consumer Banking.
Agreement to Establish Partnership with
Quiñenco—Banco de Chile
In 2007, Citigroup and Quiñenco entered into a definitive agreement to
establish a strategic partnership that combined Citigroup operations in
Chile with Banco de Chile’s local banking franchise to create a banking and
financial services institution with approximately 20% market share of the
Chilean banking industry. The transaction closed on January 1, 2008.
Under the agreement, Citigroup sold its Chilean operations and
other assets in exchange for an approximate 32.96% stake in LQIF, a
wholly owned subsidiary of Quiñenco that controls Banco de Chile, and
is accounted for under the equity method of accounting. As part of the
overall transaction, Citigroup also acquired the U.S. branches of Banco de
Chile for approximately $130 million. The new partnership calls for active
participation by Citigroup in the management of Banco de Chile including
board representation at both LQIF and Banco de Chile.
On January 31, 2010 Citigroup elected to exercise its option to acquire
approximately 8.5% of LQIF for approximately $500 million. The acquisition
of the additional shares is expected to close on April 30, 2010 and will
increase Citigroup’s ownership in LQIF to approximately 41.5%. Citigroup
retains an option to increase its ownership by an additional 8.5% of LQIF in
2010 for an additional $500 million.