The Zacks Analyst Blog Highlights:Citigroup, Itau Unibanco Holding, JPMorgan
Chase, Fifth Third Bancorp and State Street Corp.
CHICAGO, May 16, 2013
CHICAGO, May 16, 2013 /PRNewswire/ --Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Citigroup Inc. (NYSE:C), Itau
Unibanco Holding S.A. (NYSE:ITUB), JPMorgan Chase & Co. (NYSE:JPM), Fifth
Third Bancorp (Nasdaq:FITB) and State Street Corporation (NYSE:STT).
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from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Wednesday's Analyst Blog:
Citigroup Vends Credicard to Itau
In furtherance of its strategy of reducing international operations, on
Tuesday, the Brazilian unit of Citigroup Inc. (NYSE:C) came up with the
announcement of the sale of its credit card and consumer finance units in
Brazil for $1.37 billion (R$2.77 billion). The agreement has been penned with
Brazil-based Itau Unibanco Holding S.A. (NYSE:ITUB), which will take over
Credicard, the non-banking credit card and consumer finance business of
Citigroup's decision to sell off its consumer operations in Brazil comes as
part of its restructuring initiatives to counter the fall in revenues. Aimed
at increasing the efficiency of the company's overall business, the
initiatives include streamlining operations and optimizing footprints across
With the completion of this agreement, the position of Itau Unibanco will be
consolidated in the card market in Brazil. Moreover, Itau Unibanco's existing
leadership in the consumer finance and credit card markets with a diverse
portfolio of products and services and specialized platforms will be
Notably, with the buyout of Credicard, Itau Unibanco's credit card base will
surge to 37.7 million from 32.8 million as of Apr 2013. However, Citigroup
will continue its institutional and retail consumer banking businesses in
Terms of the Deal
As per the terms of the deal, Itau Unibanco will acquire Banco Citicard SA and
Citifinancial Promotora Ltda along with the Credicard card brand. Notably, the
deal includes the acquisition of 96 Credicard stores and about $3.26 billion
in consumer loan balances as of Dec 31, 2012.
However, the takeover deal excludes Corporate cards, the Citi and Diners
branded portfolios, and the Credicard Platinum portfolio (except for
Exclusive), or Credicard American Airlines cards. These cards will be
transferred to Citi brand and Citigroup will continue to manage these.
After receiving approval from the regulatory authorities, Citigroup expects to
make an after-tax gain of about $300 million or 10 cents per share following
the closure of the deal. Moreover, Citigroup will reflect these business
activities as discontinued operations beginning in the second quarter of 2013.
Earlier in Apr 2013, Citigroup entered into a deal with DenizBank, the Turkish
unit of Sberbank, Russia's largest lender to vend its consumer banking unit in
Turkey. Price for the transaction was undisclosed. Moreover, the deal is
expected to be completed in third-quarter 2013.
As per the terms of the agreement, DenizBank will take over 1.2 billion liras
($650 million) worth of assets and 1.5 billion liras (about $800 million) of
deposits of Citigroup's Turkish unit.
Earlier in Mar 2013, at an investor conference in Boston, Mike Corbat, the new
chief executive officer (CEO) of Citigroup came up with financial targets for
the company, set to be achieved by 2015. Additionally, the CEO announced
restructuring initiatives for the markets where Citi operates its business.
Corbat aspires to earn a return of 10% on tangible common equity in 2015, up
from 7.9% earned in 2012. Moreover, return on assets is expected in the range
of 0.9% – 1.1%, up from 0.62% in 2012, adjusted for certain items.
Specifically, at Citicorp, efficiency ratio is aimed to improve in the
Citigroup operates in numerous markets worldwide. Therefore, Corbat has
planned to restructure, reduce or exit some of the operations in 21 markets
globally to enhance returns. Though names of such markets were undisclosed,
but it was intimated that most of them involve consumer businesses. Notably,
in Dec 2012, Citi announced its plans to exit consumer businesses in Uruguay,
Paraguay, Turkey, Romania and Pakistan.
With the ambition of achieving financial targets in 2015 by restructuring the
business, Corbat aims to provide clients with products globally. Streamlining
of operations and efficiency improvements would aid Citi to accomplish its
goals within the stipulated time.
Further, in a challenging operating environment, lower returns and stringent
capital norms, bolstering revenues has become a challenge. Hence, many Wall
Street banks are downsizing their businesses and announcing layoffs.
Citigroup currently carries a Zacks Rank #3 (Hold). Some well performing banks
include JPMorgan Chase & Co. (NYSE:JPM), Fifth Third Bancorp (Nasdaq:FITB) and
State Street Corporation (NYSE:STT), all of which carry a Zacks Rank #2 (Buy).
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