German Retail Business Sold by Citigroup for $7.7 Billion

The nation’s biggest bank is has sold its German retail business to France’s Credit Mutuel for $7.7 billion in cash in an effort to raise capital and shore up its balance sheets as it struggles to come to terms with billions of dollars in write-downs on toxic subprime- related debt.

In a statement released July 11, Citigroup said the deal includes its Duesseldorf-based Citibank Privatkunden AG & Co. KGaA, along with some affiliates. The sale is expected to close in the fourth quarter if approved by regulators.

Like many U.S. banks, Citigroup has been hit hard from the subprime mortgage meltdown, writing off $17 billion in subprime-related investments in the fourth quarter alone. Since late last year, the beleaguered bank recorded more than $45 billion of write-downs and credit losses and slashed its dividend 41 percent.

In the fourth quarter, the bank posted a loss of $9.83 billion - its first loss since its creation in 1998 from the merger of Citicorp and Weill’s Travelers Group, and amidst the credit crisis Ctigroup will suffer up to 30,000 or more job cuts. According to its corporate Web site, Credit Mutuel is France’s second-largest retail bank, with nearly 15 million customers and more than 5,000 branches.