Citibank 2009 Annual Report Download - page 155

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Joint Venture with Morgan Stanley
On June 1, 2009, Citi and Morgan Stanley established a joint venture (JV)
that combines the Global Wealth Management platform of Morgan Stanley
with Citigroup’s Smith Barney, Quilter and Australia private client networks.
Citi sold 100% of these businesses to Morgan Stanley in exchange for a 49%
stake in the JV and an upfront cash payment of $2.75 billion. The Brokerage
and Asset Management business recorded a pretax gain of approximately
$11.1 billion ($6.7 billion after-tax) on this sale. Both Morgan Stanley and
Citi will access the JV for retail distribution, and each firm's institutional
businesses will continue to execute order flow from the JV.
Citigroup’s 49% ownership in the JV is recorded as an equity method
investment. In determining the value of its 49% interest in the JV, Citigroup
utilized the assistance of an independent third-party valuation firm and
utilized both the income and the market approaches.
Sale of Citigroup Technology Services Limited
On December 23, 2008, Citigroup announced an agreement with Wipro
Limited to sell all of Citigroup’s interest in Citi Technology Services Ltd.
(CTS), Citigroup’s India-based captive provider of technology infrastructure
support and application development, for all-cash consideration of
approximately $127 million. A substantial portion of the proceeds from
this sale will be recognized over the period in which Citigroup has a service
contract with Wipro Limited. This transaction closed on January 20, 2009
and a loss of approximately $7 million was booked at that time.
Sale of Upromise Cards Portfolio
During 2008, the Company sold substantially all of the Upromise Cards
portfolio to Bank of America for an after-tax gain of $127 million ($201
million pretax). The portfolio sold had balances of approximately $1.2
billion of credit card receivables. This transaction is reflected in the North
America Regional Consumer Banking business results.
Sale of CitiStreet
On July 1, 2008, Citigroup and State Street Corporation completed the sale
of CitiStreet, a benefits servicing business, to ING Group in an all-cash
transaction valued at $900 million. CitiStreet is a joint venture formed in
2000 that, prior to the sale, was owned 50% each by Citigroup and State
Street. The transaction closed on July 1, 2008, and generated an after-tax
gain of $222 million ($347 million pretax).
Divestiture of Diners Club International
On June 30, 2008, Citigroup completed the sale of Diners Club International
(DCI) to Discover Financial Services, resulting in an after-tax gain of
approximately $56 million ($111 million pretax).
Citigroup will continue to issue Diners Club cards and support its brand
and products through ownership of its many Diners Club card issuers around
the world.
Sale of Citigroup Global Services Limited
In 2008, Citigroup sold all of its interest in Citigroup Global Services
Limited (CGSL) to Tata Consultancy Services Limited (TCS) for all-cash
consideration of approximately $515 million, resulting in an after-tax gain
of $192 million ($263 million pretax). CGSL was the Citigroup captive
provider of business process outsourcing services solely within the Banking
and Financial Services sector.
In addition to the sale, Citigroup signed an agreement with TCS for TCS
to provide, through CGSL, process outsourcing services to Citigroup and its
affiliates in an aggregate amount of $2.5 billion over a period of 9.5 years.