citis-good-bank-bad-bank-solution

Citi's good bank, bad bank solution

CitiÆs restructuring is both a change in direction and a return to simplicity, but some perceive it may be too little, too late for the current management.

Daniel Inman

January 20, 2009

In an early address to employees after taking charge in late 2007, CitiÆs CEO Vikram Pandit suggested that one way the financial behemoth could tackle the subprime crisis was to split itself into a bad bank and a good bank. According to this plan, the company would offload its distressed assets to a æbad bank', leaving the ægood bank' unhindered.

The announcement Citi made on Friday suggests that this is what is finally happening. But despite the proposal to split Citi into a core bank, Citicorp, and a non-core bank, Citi Holdings, the similarity is only cosmetic. The two banks which have been proposed are awash with problems that run deeper than the collateralised debt...

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