Blackstone and other private-equity firms have reportedly held informal talks about buying CitiFinancial Auto, the nonprime auto unit of Citigroup.
Potential buyers are looking to buy the $16 billion loan portfolio at a steep discount, according to a report in today’s New York Post. CitiFinancial Auto originates mainly indirect loans via 6,000 dealers nationwide. Its portfolio has shrunk from $21 billion in early 2008.
This is not happening. While these firms may have “kicked the tires,” as the Post puts it, Citigroup has made it clear that it will not sell CitiFinancial Auto. In a Wall Street presentation on Nov. 11, Ned Kelly, the vice chairman of Citigroup, said definitively that CitiFinancial Auto is not on the block.
What Citi will sell, however, is its CitiFinancial consumer finance business, excluding auto, and its Retail Partner Cards business, a private-label card business with about 100 million accounts outstanding.
One reason why Citi Auto will stay in the fold is that most of its losses are covered as part of Citigroup’s loss-sharing agreement with the federal government. Citi holds about $15 billion of auto loans, and about $10.8 billion of that is “ring-fenced” by the government. In all, $300 billion of Citi assets are protected by the federal government.
“Performance of that [auto] portfolio has actually been quite good,” Kelly said.
At the end of last quarter, 6.61% of Citi Auto’s portfolio was not current and 1.83% was 90 days or more past due.
Yes I did see the article in the New York Post. I have worked for Citi for 17 years. Im one of the best collectors they have..I have never missed a goal and have won enough awards to to fill a box ..Concerned very much about my future with Citi. If there is anything you know or can suggest I would be greatful. I love Citi. I found alittle hope in JJ Hornblass Nov 19 article