The Zacks Analyst Blog Highlights:Citigroup, Itau Unibanco Holding, JPMorgan Chase, Fifth Third Bancorp and State Street Corp.
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
: C ), Itau Unibanco Holding S.A.(NYSE: ITUB),
JPM Juan Pablo Montoya
JPM Jabatan Perdana Menteri
JPM Journal of Property Management
), Fifth Third Bancorp (Nasdaq:
) and State Street Corporation (NYSE:
STT Suomen Tietotoimisto
STT Secure Transaction Technology
STT Surface Tension Transfer
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Here are highlights from Wednesday’s Analyst Blog:
v. vend·ed, vend·ing, vends
a. To sell by means of a vending machine.
b. To sell, especially by peddling.
Credicard to Itau
In furtherance of its strategy of reducing
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.
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 geographies.
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 strengthened.
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 Brazil.
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,
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
After receiving approval from the regulatory authorities, Citigroup
expects to make an after-tax gain of about $300 million or 10
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
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 (
) 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
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 mid-50%.
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
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
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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