Re-Engineered Citi (NYSE: C) Pays Back Treasury – Poised For Growth

A recent blog post from Zacks shows that the reports of Citigroup Inc.’s (C) demise, were premature at best. 

The optimism surrounding Citi’s recovery goes well beyond finalizing its final sale of all bailout funds received from the U.S. Treasury.  

The company is now focused on inducting strategic initiatives to improve its profitability in the upcoming years.

Citi’s core business is progressing well and the international business is gaining momentum. Its wholly-owned subsidiary, Credicard, signed a binding agreement with U.S. Bancorp’s (NYSE: USB) wholly-owned subsidiary, Elavon, in order to form a joint venture form a merchant services company offering payment solutions in Brazil.

Credicard has over 40 years of experience in the Brazilian market and manages Diners Club International, Visa and MasterCard labels. Elavon on the other hand provides end-to-end payment processing services to more than one million merchants in the United States, Europe, Canada, Mexico and Puerto Rico.

The deal therefore aims at leveraging Credicard’s market expertise and brand recognition and strong processing platform of Elavon. In addition to this, Citi intends to increase its presence in China by tripling its branches and workforce in the next few years.

In another development, Citi’s consumer lending arm, CitiFinancial, has renamed its U.S. Full Service Network business. The business will begin operating under the new name ‘OneMain Financial’ in the summer of 2011. The re-branding is to give the company an identity that better fits the company’s image and activity. The company also said that the OneMain name reflects a localized business model and commitment to customers.

Citi was in bad shape during the financial crisis and had to sort to government bailout for its rescue. The company has been executing a number of strategic reengineering efforts. It has termed CitiCorp as its core operating unit and Citi Holdings as its non-core unit.

Citi intends to dispose of through sale and divestitures the non core operations and CitiFinancial happens to be a part of this non-core unit. Hence the change in name can be seen as a step towards achieving that, i.e. to prepare the unit for sale.

Citi has already sold a number of its non-core operations such as the European credit card business, a number of its insurance business and the brokerage operations in Japan. However, the company is extending its core operations in the emerging economies such as China, India and Brazil.

Citi’s stock closed up 1.76% on Friday to $4.77 per share.