Capital Rules

The bank doesn't include the Smith Barney stake as capital under Basel III rules, so a writedown won't affect Citigroup's capital position under the new requirements, according to the filing. The Basel Committee on Banking Supervision is seeking to make the financial system safer by requiring banks to hold a bigger cushion against losses.

A writedown of about $3.2 billion would be a "semi-non- event" for Citigroup because the sale will help the firm's requirements under Basel rules, Charles Peabody, an analyst with Portales Partners LLC, wrote in a note to clients today. The bank is exiting a "business with poor returns," said Peabody, whose rating on Citigroup shares is the equivalent of sell.

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