Citigroup Inc. (C:US), the third-largest U.S. bank by assets, boosted the size of its European distressed-debt sourcing unit as crisis-hit lenders seek to cut their balance sheets.
Citigroup now has six people working on finding troubled assets from other banks in Europe, including two people dedicated exclusively to this task, according to Simon Boughey, a London-based spokesman for the bank. The unit had one person a month ago, he said.
“The team will focus on aiding our banking clients as they continue the process of deleveraging,” said Conor Davis, head of credit sales for Europe.
European banks may need to reduce their balance sheets by as much as $3.8 trillion through asset sales and reduced lending to meet tougher capital requirements, the Washington-based International Monetary Fund said in a report in April. Disposals will include about 500 billion euros ($644 billion) of loan portfolios in the next five to 10 years, Moody’s Investors Service said on Aug. 8.
Funds investing in distressed assets earned a 5.2 percent return this year, after losing 6.2 percent in 2011, according to an index compiled by by hedge fund advisory firm Hennessee Group LLC.
Citigroup’s shares fell 70 cents to $32.16 at 10:55 a.m. in New York.
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