Citigroup Inc. appears to have abandoned its plan to sell its consumer lending unit -- which also makes real estate loans -- until the economy improves and it can fetch a better price for it, according to Fitch Ratings Inc.
Citi put the unit, now called OneMain but previously known as CitiFinancial, on the block in 2009 as part of a broad strategy to shed noncore assets.
OneMain's forbear's include such once well-known subprime brands as Commercial Credit and Associates First Capital Corp.
Several news outlets reported last week that negotiations to sell OneMain to conglomerate Berkshire Hathaway and two private equity groups collapsed after the prospective buyers concluded that they would have difficulty funding the business going forward. In a note published Wednesday, Fitch said that any buyer would likely need to fund the consumer lending business by bundling and securitizing loans -- an immense challenge at a time when secondary-market demand for consumer loans is very weak.
"While potential buyers remain wary of businesses that rely on loan securitization, we believe Citigroup will continue its exploration of separation opportunities once markets stabilize," Fitch said.
Until a buyer is found, Citi intends to keep the profitable OneMain in the CitiHoldings portfolio that Citi set up in 2009 to house its noncore assets, according to Fitch. That portfolio now houses $289 billion of assets, or 15% of Citi's total assets, down from roughly $650 billion three years ago.
