Magazine article American Banker

Citicorp Sells 10% of Saudi American

Magazine article American Banker

Citicorp Sells 10% of Saudi American

Article excerpt

In its search for cash to help hoist its key capital ratios, Citicorp said Thursday that it had sold a portion of its minority stake in a profitable Middle Eastern bank.

The sale of 10% of Saudi American Bank was made late last month for an undisclosed sum. The transaction leaves the money-center institution with a 30% holding in the $7.4 billion-asset bank, which is based in Riyadh, Saui Arabia.

Buyers of the 600,000-share stake were two Saudi government pension and welfare agencies, Citicorp said in a statement Thursday.

Speculation on Price

A Saudi newspaper report said the shares were sold for $467 million, but bankers said that number was probably too high, with the actual price closer to $300 million.

A $300 million deal should add about 0.10% to 0.15% to Citicorp's core capital ratio. That ratio currently stands at 3.67%, according to Mark Gross, analyst for IBCA Ltd., a credit rating agency. The Bank for International Settlements has set a minimum Tier 1 capital ratio of 4% for global banks to meet by the end of this year.

The sale is "a move in the right direction, "Mr. Gross said, "and there could be other factors, like securities gains, that could take Citicorp nearer 4% for the fourth quarter."

There has been industry speculation since last fall that in an effort to raise capital Citicorp might sell part of its long-standing holdings in various banking and financial affiliates around the world, interests estimated to be worth as much as $1 billion. …

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