One of the leading global financial institutions, Citigroup Inc (NYSE:C), sold its stake in China Guangfa Bank to country’s prominent insurance player China Life Insurance. As per the report published by Wall Street Journal, this stake is worth $3 billion.
Insights of Matter
Citigroup bought 20% stake in China Guangfa Bank way back in 2006 for $610 million. The senior management team of Citigroup believes that this stake does no longer fall in line with company’s strategic plans in China. Earlier, Citigroup didn’t have a significant presence in China, but now it has a well-established branch network; therefore, it doesn’t think China Guangfa Bank’s services can fit into in the files anymore.
In an official statement, Francisco Aristeguieta, CEO – Asia Pacific, Citigroup announced that the transaction has been executed to simplify things for the company in China. Going forward, Citigroup seeks to build its independent franchise network, and this stake sale is a great step in that direction. Even though city hasn’t announced the exact date to close this transaction, experts believe it will be done by the end of the current year.
The transaction isn’t likely to have any impact on the upcoming earnings of Citigroup in the month of April.
Citigroup Receives Subpoena
Meanwhile, the Citigroup announced that it had received a subpoena in relation with FIFA bribery scandal. It’s the first instance when a U.S. bank has come out in the light and spoken so clearly about the governing entity of the international soccer.
A recent report of CNN Money claimed that many senior FIFA officials had used the services of U.S. banks, such as JPMorgan Chase, Citigroup and Bank of America to receive and send about $150 million in kickbacks, bribes, and other illegal activities.
Citigroup said it would try its best to cooperate the authorities on the subpoena. Further details about the same would be disclosed at a later date.
