Citi to hold on to HDFC stake, says CEO

Although it recently offloaded its stake in commodity exchange MCX, the country’s largest foreign lender, Citi, has no intention of selling its stake in Housing Development Finance Corporation (HDFC), according to its South Asia Chief Executive, Mark Robinson.

On the sidelines of the Business Standard Banking Roundtable on Wednesday, Robinson confirmed that the group had offloaded its stake in MCX, but declined to share details. He added that the Citi would hold on to its stake in HDFC. “That decision has been take in New York and Vikram Pandit (the global CEO) is very clear that we want to keep the stake. Our holding in HDFC is part of Citicorp, whereas the MCX stake was part of Citi Holdings,” he added.

Globally, Citi had decided to offload a number of its non-core assets, choosing to focus on a much smaller portfolio. It may even exit certain countries where its presence is not substantial.

Hence, it has divided its businesses into two groups—Citicorp and Citi Holdings. Citicorp houses all the units it plans to retain, while Citi Holdings consists of those it plans to wind down.

Citigroup held 3.9 million shares in MCX, which it had acquired in September 2007. It currently holds a 11.68 per cent stake in HDFC, the country’s largest mortgage financier, through its two subsidiaries, Citigroup Holdings Mauritius and Citigroup Strategic Holdings Mauritius. The stake is valued at Rs 12,570 crore, based on the scrip’s Thursday closing price of Rs 2,427.25. Citi had upped its stake in HDFC substantially, by buying a 9.3 per cent stake from Standard Life.

Citi Holdings also includes the lender’s consumer finance arm, CitiFinancial, which ran up big losses during the economic downturn. “CitiFinancial probably makes up 80-90 per cent of Citi Holdings. Since most of the businesses under CitiFinancial are integrated, we are looking to sell it whole rather than piecemeal,” Robinson said.