- "One of the primary benefits of becoming smaller is escaping the vise that is the current regulatory environment,” says the team at KBW, suggesting a three-step process to breaking up the bank: 1) Sell the international consumer business, excluding Mexcio; 2) Sell the Mexico business; 3) Split what's left into a U.S. consumer business and a global corporate bank.
- The moves, says KBW, would deliver an estimated market value of $198B, or 57% more than investors currently value Citigroup (C).
- "The rules and capital requirements are so high that these banks cannot earn an acceptable return for shareholders, nor can they in some cases earn their cost of capital,” KBW CEO Tom Michaud tells Bloomberg. "The bar has been set too high for these banks to keep their current business models.”