Tags: citigroup | german | deal

Sources: Citi Germany Unit Deal By Early July

Wednesday, 18 Jun 2008 10:36 AM

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FRANKFURT, June 18 (Reuters) - Citigroup will decide whether to sell its German Citibank retail banking operation in early July once it receives binding offers, sources familiar with the matter told Reuters on Wednesday.

The sources said that interested banks still in the running to buy the unit included Germany's Deutsche Bank and Commerzbank and France's Credit Mutuel.

Rival banks BNP Paribas from France and Santander have recently dropped out of the bidding.

Citibank declined to comment.

LBBW analyst Robert Mazzuoli gave Deutsche Bank the best chances for winning the bidding for Citibank, saying Germany's biggest bank would probably be able to stump up the expected 4-5 billion euro ($6.2-$7.7 billion) price tag without a capital increase.

The addition of Citibank would also help achieve critical mass at Noris Bank, the consumer business Deutsche Bank acquired in 2006, he said.

Mazzuoli played down market speculation about a multiple merger among German banks, saying the complexity of integrating operations would limit the number of partners to two.

"Whichever bidder wins the race for Citibank effectively rules itself out of further consolidation moves," he said.

Citibank is only one part of the shifting tectonics of banking consolidation in Germany.

Commerzbank and Dresdner Bank, part of German insurer Allianz, are looking at each other's books.

A source from Commerzbank's supervisory board told Reuters last week that the two sides were in advanced merger talks but warned that eight in 10 deals still failed at this stage.

Deutsche Bank is also interested in Dresdner, sources familiar with the matter have said.

German mail and logistics company Deutsche Post is also weighing a sale of its retail banking unit, Postbank.

Trade unions in the banking sector have said they would resist mergers among the country's blue-chip lenders, fearing tens of thousands of jobs could be cut.

However, job cuts were not seen as a big issue in a possible sale of Citibank.

"The buyer would be mainly interested in holding on to the employees," said an employee representative on Citibank's supervisory board.

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