Is Citigroup (C) Divesting Analytics Business 'Yield Book'?

Wall Street banking giant Citigroup Inc. C continued with its strategy of divesting parts of its consumer and investment banking operations to free up capital, reduce expenses and in turn increase profits. The firm is planning to sell its fixed income analytics business named Yield Book, according to Bloomberg.

Though financial terms of the transaction remain undisclosed, as per sources, Yield Book accounts for around $100 million in revenue annually. Yield Book relates to books about bond data which began publishing in the 1960s by Wall Street firm Salomon Brothers.

Yield Book was initiated in 1989 by Salomon Brothers. It is a software tool which helps customers in calculating bond yields. The unit provides various analytical tools to investors and traders in corporate, government and mortgage bonds along with derivatives and other securities.

According to the source, providers of trading information services include S&P Global Ratings Inc., Intercontinental Exchange Inc. and MSCI Inc. with all being potential bidders.

Spokesperson for Citigroup and Intercontinental Exchange refrained from making any comments, while the spokesperson of S&P Global and MSCI were not available for comments.

In Feb 2016, Citigroup revealed the plan of decreasing its presence in Brazil, Argentina and Colombia, in line with the company’s strategy of minimizing its international operations. In June, Citigroup sold its prepaid card services unit to Wirecard AG, while in May completed the sale of its stock-trading business to Citadel Securities.

Conclusion

Regulatory pressure over Citigroup’s global operations and the concerns of weak returns were the primary reasons behind the restructuring. Aimed at increasing the efficiency of the company’s overall business, the initiatives include streamlining operations and optimizing its presence globally.

Amid the troubled financial currents, Citigroup is likely to gain some financial flexibility from such moves. We believe the company is poised well to address its internal inefficiencies and setbacks. Further, we believe that the company’s streamlining initiatives will boost its capital position, reduce expenses and drive operational efficiency.

Citigroup currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space are First Midwest Bancorp Inc. FMBI, Hercules Capital, Inc. HTGC and Gladstone Capital Corp. GLAD. All three stocks carry a Zacks Rank #2 (Buy).

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