Citi is busy reducing its stake in a number of businesses around the globe. Last week, the company sold its 2.7% share in Shanghai Pudong Development Bank for $668 million. That follows Citi's sale last month of a 9.9% share in India's largest mortgage lender, Housing Development Finance Corporation, raising $1.9 billion.
Citigroup is also looking to cut its investment in Turkish lender Akbank, reducing its ownership stake from 20% to less than 10%. However, that sale that is subject to regulatory approval, which will come at a cost, as Citi's expected to take on a one-time charge of $700 million in its first quarter.
And that's still not all. Nomura Holdings analyst Glenn Schorr said Citigroup is looking to sell the remainder of its stake in retail brokerage unit Morgan Stanley Smith Barney, its joint venture with Morgan Stanley
Citigroup isn't the only bank looking to shed assets, though: Fellow banking behemoth Bank of America
No dividends? So what?
Although Citi's unable to pay out higher dividends, it will eventually look to raise its payout. Currently, Citi pays out a symbolic dividend of $0.04 that translates into a yield of just 0.1%. Through the sale of these non-core assets, the bank is looking to bolster its balance sheet so it can increase its dividends and payout in the future -- and that's something investors can look forward to. This is the right call for the long run. Do you agree? Let me know in the comments box.
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