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Macquarie Rumoured To Bid For Citi’s Australian Stock Broking Unit
There have been unsubstantiated reports quoting a piece in the Australian Financial Review, that Macquarie and NAB are interested in bidding for Citi’s Australian retail stock broking unit Citi Smith Barney.
Macquarie Group and NAB both declined to comment on the report that the two have an interest in the business whilst Citi also declined to comment on the report. The un-sourced story in the Australian Financial Review went as far as saying that Macquarie was believed to have already made a bid for the Citi subsidiary.
A Macquarie spokesperson was quoted by the AAP as saying “We don’t comment on speculation,”. A Citi spokesperson said the bank did not comment on rumour or speculation, while a NAB spokesman also declined to comment.
Citi Smith Barney is the Australian stock broking and wealth management unit of the global banking major, an acquisition by Macquarie would bolster the Australian Investment Bank’s position as the largest full service retail broker in Australia with about 430 advisers.
Such a sale would basically invalidate everything CEO Vikram Pandit and predecessor Chuck Prince has said about the US banking giant’s commitment the universal banking model. No price has been mentioned so far, but it is hard to see a sale of the operation having too much impact on the bottom line for Citigroup, whilst at the same time the implications on the market perception of CEO Vikram Pandit’s leadership ability and on the larger strategy of the bank would be serious.
Mr. Pandit has committed himself to an aggressive cost cutting strategy rather than one of divestment, axing 52,000 jobs worldwide and better integrating units which have replication of many functions caused by years of mergers and acquisitions which created the behemoth to begin with. A sale of the Australian stock broking and wealth management unit would mean a change in the strategy of a commitment to universal banking coupled with aggressive cost cutting and would not bode well for the banking giant, and without a price, it is not immediately clear how much of a benefit this would be.
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