Citi Offers More Details on Consumer Finance Unit

Citigroup's plan to shift bad loans to a new division from its U.S. consumer finance business will make the remaining network profitable, said Mary McDowell, CEO of the CitiFinancial unit. Bloomberg reported that the "streamlined" branch network will serve 1.6 million customers and manage $18 billion of loans and other receivables, or about 70% of the current total. McDowell told employees on a June 1 conference call that the network will be profitable when excluding losses on $8 billion of receivables being moved to a new CitiFinancial division specializing in loan modifications, she said. Citigroup is carving up CitiFinancial to attract buyers 17 months after CEO Vikram Pandit tagged it for sale. While results for the Baltimore unit are not disclosed, it is part of Citigroup's local consumer lending group, which had a loss of $10.5 billion last year. Citigroup said June 1 that CitiFinancial also will close 330 U.S. branches and cut 500 to 600 jobs under the strategy. The unit has its roots in Commercial Credit, a consumer finance unit that Citi inherited when it merged with Travelers.