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Citigroup (C) Down on CIFS & Citi Asesores Sale to Insigneo

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Citigroup Inc. (C - Free Report) has inked a deal with Inisgneo, a Miami-based independent broker-dealer and Registered Investment Advisor (RIA), to divest its non-bank subsidiaries, Citi International Financial Services, LLC (CIFS) and Citi Asesores de Inversion Uruguay S.A. (Citi Asesores). The sale is subject to regulatory consent. Shares of Citigroup declined 2.5% during Friday’s trading session, probably due to the news announcement.

CIFS is a Puerto Rico-based broker-dealer and Citi Asesores is an investment advisory firm in Uruguay’s free-trade zone. Citigroup will uphold all the current bank deposit relationships with wealth clients, who will be transferring to Insigneo. Citigroup’s well-established presence in Puerto Rico and Uruguay, serving institutional clients, will remain unaltered. Per agreement with Insigneo, Citigroup is eyeing opportunities to provide banking services to the latter’s existing clients.

Raul Henriquez, chairman and CEO of Insigneo, commented, “We are extremely happy to incorporate CIFS and Citi Asesores into Insigneo Financial Group’s growing platform, and we are pleased to continue our relationship with Citi as a banking services provider for our new clients.”

Per Citigroup’s management, the sale will permit the bank to streamline its wealth business. Moreover, it gives the firm an opportunity to continue providing its clients with unparalleled retail banking, while pursuing to work locally with investment professionals, who will move to Insigneo upon deal completion.

Citigroup has been making efforts to revamp its wealth management business. In fact, in an effort to boost its wealth division operations, Citigroup aims to deploy investments in four major wealth centers — Singapore, Hong Kong, the UAE and London. The company has outlined plans to exit consumer banking operations in 13 markets across Asia and EMEA, including Australia, Bahrain, China, India, Indonesia and Korea and will redeploy capital freed from such exits in wealth division expansion.

Making progress on this strategy, C, in October, had announced that it would wind down its consumer banking business in South Korea. In total, Citigroup anticipates the release of roughly $7 billion of allocated tangible common equity over time from such planned exits. These initiatives are expected to boost C’s capital position and drive operational efficiencies.

Over the past year, shares of Citigroup have declined 2.8% against 33.4% growth recorded by the industry.

Zacks Investment ResearchImage Source: Zacks Investment Research

Currently, Citigroup carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Some better-ranked stocks in the banking space are Southern First Bancshares (SFST - Free Report) , Shore Bancshares (SHBI - Free Report) and Colony Bankcorp, Inc. (CBAN - Free Report) . At present, SFST and SHBI sport a Zacks Rank #1 while CBAN carries a Zacks Rank #2 (Buy).

In the year-to-date period, shares of Southern First have jumped 79% whereas Shore Bancshares and Colony Bankcorp gained 35.2% and 15.2%, respectively.

Over the past 60 days, the Zacks Consensus Estimate for Shore Bancshares’ current-year earnings has been revised 27% upward. The same for Southern First has moved 13.3% north.

Current-year earnings estimates for Colony Bankcorp have moved 15.2% up over the past two months.

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