By Parveen Chopra, IANS
New York : Indian-born Citigroup CEO Vikram Pandit has formed a US residential mortgage business by combining separate units within group’s consumer and investment bank.
“Aligning our existing US mortgage businesses in this way will improve their overall effectiveness and allow us to better serve our existing clients while providing greater value to our shareholders,” an internal memo of the group issued Tuesday reads.
The group has appointed Bill Beckmann, the president and chief operating officer of CitiMortgage, to oversee the new business.
Beckmann is an experienced banker who only a year ago helped merge its subprime (CitiFinancial) and prime mortgage operations (CitiMortgage) together in its consumer bank.
Citigroup has long been a major player in the mortgage business and one of the biggest issuers of subprime home loans.
But so far, mortgages issued by its consumer bank have performed much better than those bought and packaged by its investment bankers.
The sharp downturn in the housing market in the US has badly bruised Citigroup. Merrill Lynch said it might face an $11-billion fourth-quarter write-down tied to subprime mortgages.
Citigroup is slated to report fourth quarter results Jan 15.
Merrill’s statement has caused shares of Citigroup to fall to the lowest price seen in over five years.
It was not clear how many jobs would be affected by the reorganisation of Citigroup’s residential mortgage business.
Recently, CNBC television speculated that Pandit might cut 5 to 10 percent of Citigroup’s work force of over 300,000.