Citi examines break up of German business

Citigroup is eyeing a break-up or sale of its business in Germany as part of a global reorganisation of the loss-making US group, sources familiar with the matter said.

Citi in Germany, which makes most of its money from loans for everything from televisions to cars, contributed nearly three per cent of the bank's global pre-tax profit in 2006. Market ructions ruined the group's earnings.

It is the centrepiece of the bank's business in Europe and any break up could signal a change in direction for the largest US bank and global financial services powerhouse.

Although it is profitable, Citi's retail business in Germany - Citibank - has been struggling with fierce competition and falling profits and is a prime candidate for divestment.

Citibank in Germany saw its pre-tax profit slide 17 per cent in the first six months last year to €264 million ($418 million), continuing the sharp decline seen in recent years.

Its US consumer lending business has had more serious difficulties and tumbled to a loss of more than $600 million last year compared with a profit of $1.9 billion in 2006 as the world's largest economy wobbled.