For Citigroup asset sales likely to be difficult

By Paritosh Bansal

NEW YORK (Reuters) - Citigroup (C.N) may explore further asset sales after divesting its Smith Barney retail brokerage unit to Morgan Stanley (MS.N), but the banking giant is likely to have a tough time finding buyers.

Chief Executive Vikram Pandit is trying to shed hundreds of billions of dollars of assets and reduce risk after Citigroup suffered $20.3 billion (13.7 billion pounds) of losses in the year ended September 30. The bank is expected to post another loss for the 2008 fourth quarter when it reports results this month.

Citigroup has considered selling its Banamex Mexican banking unit and Primerica Financial Services, people close to the matter have said. The Wall Street Journal reported on Monday that CitiFinancial, international retail-brokerage operations and the private-label credit-card businesses may also be put on the block. The bank declined to comment.

But Citigroup may not find it easy to sell other assets, and like insurer American International Group (AIG.N), it could run into problems disposing of units amid the financial crisis, investment bankers said. Few would-be buyers have enough cash, stocks are down, financing is not easily available, and the quality of financial assets is often suspect.

"They may quietly explore what's available. I just don't think that they can do very many deals in the near-term," said Marshall Sonenshine, chairman of New York-based investment bank Sonenshine Partners. "But over the next couple of years, they will sell a lot of those businesses, and so will AIG."

CONSUMER CREDIT

Citigroup tried to sell life insurance unit Primerica over the summer, but its plans were set back as the financial crisis took over.

Selling consumer lending businesses such as private label credit cards and CitiFinancial, which provides loans for home improvement, debt consolidation and tuition, is also likely to prove difficult in an economic downturn as consumers suffer.