HSBC and Citigroup ponder sell-offs to ride out storms

HSBC is mulling an exit from all or parts of its £6.5 billion auto finance business, according to the Wall Street Journal, while Citi is looking to close or sell several of its medium-sized businesses.

Insiders say Citi could offload up to $12 billion (£6 billion) of assets.

Those could include Student Loan Corp, which is 80% owned by the bank; its North American auto lending business; Brazilian credit card company Redecard, in which Citigroup holds a 24% stake; and its Japanese consumer finance business.

New Citi chief executive Vikram Pandit's plans to streamline its operations include laying off about 20,000 employees. The bank announced in April that it was cutting about 5% of its workforce, or 17,000 jobs, and there has been talk of cuts above that number. The bank employs more than 300,000 people in over 100 countries.

News of the potential sell-offs comes after yesterday's reports that Citigroup may need to slash its dividend by 40% to preserve capital, and that Merrill Lynch and JP Morgan Chase may write off $33.6 billion of debt this quarter as the global credit crunch deepens.

"It will be a couple of quarters before the current credit crisis is fully digested by the markets," said Goldman Sachs analyst William Tanona.

Japan is to host a meeting in February of finance ministers and central bankers from the Group of Seven leading economies to discuss the growing subprime banking crisis and high energy prices. Finance Minister Fukushiro Nukaga will chair the meeting which will take place on 9 February in Tokyo.