Financial and Banking News
Citigroup revamps mortgage businessCitigroup Inc. is cutting residential mortgage assets by $45bn and costs by $200m at the same time that Merrill Lynch discontinues origination at First Franklin, a sub-prime mortgage company the bank bought two years ago.
Officials at Citigroup said in a statement that they will reduce the assets in its US mortgage business by a fifth from December 2007 levels and will cut the amount of new loans to be held in the portfolio by more than half over the coming year.
In addition, the company will integrate middle office and support areas and consolidate operations, policies and procedures in its US mortgage business under CitiMortgage. The bank expects to cut costs by $200m within 12 months.
Bill Beckmann, president of CitiMortgage, said: "These changes will enable us to manage the business unit's capital for enhanced returns." Going forward, markets and banking will have a significant role in shaping CitiMortgage's products, as well as its pricing and distribution activities.
Citigroup shares fell sharply this week in response to a prediction by the head of a Dubai-owned investment firm that previous capital-raising efforts by Citigroup were not enough to sustain the company through turbulent economic conditions and continuing credit turmoil.
The bank has raised more than $26bn over the past three months from sovereign investors in the Middle East and Asia, as well as from the public due to more than $20bn in credit-related losses.
The Wall Street Journal reported Citigroup executives are confident with the company's capital levels and are not looking to raise additional funds from outside investors, according to people familiar with the matter.
Yesterday Merrill Lynch said it was discontinuing mortgage origination at its First Franklin subsidiary in the US and will explore the sale of Home Loan Services, a mortgage loan servicing unit for First Franklin, because of the deterioration of the sub-prime lending market.
Source: Financial News Online
Date: 07.03.2008 
2007-2020 © BanksDaily.com | Rus