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Citi's Private Bank Sells Part Of Trust Business To Focus On Core Activity

Tom Burroughes Group Editor 24 January 2013

Citi's Private Bank Sells Part Of Trust Business To Focus On Core Activity

Citigroup’s private banking arm has agreed to sell part of its US trust business to privately-held Reliance Financial in a move to reduce non-core assets.

Citigroup’s private banking arm has agreed to sell part of its US trust business to privately-held Reliance Financial in a move to reduce non-core assets.

The financial terms of the deal were not disclosed.

Reliance, which is based in Atlanta and provides financial services including wealth management, will acquire 100 per cent of the stock of Citigroup Trust-Delaware. The acquisition consists of around 3,000 accounts and $1.7 billion in assets under administration.

"We are pleased to have reached this agreement with Reliance Trust Company which will enable them to take over the management of this portion of our business in North America," said Paul James, chief executive of Citi Private Bank's trust business. "Citi Trust in North America remains focused on providing its full suite of trust and estate services to the high net worth and ultra high net worth clients of Citi Private Bank through our Delaware, New York and South Dakota centers."

Michael Roberts, president of Reliance Trust Company of Delaware, said the deal will allow the company "to increase its size, scale and overall nationwide footprint in the personal trust business."

This publication understands that the assets in Citi Private Bank's trust business were non-target market accounts that were legacy Smith Barney-sourced accounts from outside the private bank channel. Following Citi's joint venture with Morgan Stanley, Citi Trust continued to service the legacy Smith Barney portfolio under a professional fiduciary services agreement, and that agreement expired on June 1, 2012.

Last week, Citigroup reported net income for the fourth quarter of 2012 of $1.2 billion, or $0.38 per diluted share, on revenues of $18.2 billion. This compared to net income of $956 million, or $0.31 per diluted share, on revenues of $17.2 billion for the fourth quarter of 2011.

The bank has made a number of changes under the leadership of Michael Corbat, the chief executive who took over from Vikram Pandit last year. On January 7, he announced a series of management changes. The London-based chief investment officer of Citigroup’s private bank, Richard Cookson, left the US-headquartered bank as part of cost cuts and amid a series of changes to senior management roles.

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