In accordance with the Volcker Rule,
) is in the final stages of spinning off an internal hedge fund
unit, which it independently renamed as Napier Park Global
Capital. The unit was previously managed by the bank's Citi
Capital Advisors (CCA) division.
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The company has already obtained a regulatory approval for the
spin-off. However, it is yet to receive a green signal form the
investors and counterparty. Upon completion of the spinout,
Napier Park is projected to have $6.8 billion in assets under
Earlier in 2012, Citi announced that it would branch out CCA with
75% of its stake going to the unit's management and employees.
Out of this, 25% will be in the hands of the co-heads of CCA,
James O'Brien and Jonathan Dorfman, whereas the remaining will be
under the employees. Citi will hold only 25% stake in the
independent company. Providing managers a stake in the new firm
is anticipated to offer increased motivation to earn better
CCA's hedge funds traded on several risky assets, including
European loans, complex credit instruments, municipal bonds,
mortgage-backed securities and the debts of struggling companies.
Accordingly, Citi had almost $2.5 billion invested in the funds.
Thus, the company is looking to steadily shed these assets to
comply with the Volcker Rule, which restricts banks from trading
on their own.
Citi currently carries a Zacks Rank #3 (Hold). Other major banks
that are performing well include
Fifth Third Bancorp
Regions Financial Corp.
). BankUnited carries a Zacks Rank #1 (Strong Buy) and the other
two hold a Zacks Rank #2 (Buy).