If there is one company I would not not want to work at right now, it is Citigroup’s OneMain Financial subprime lending unit.
That’s because OneMain is either still on the sales block. Or is no longer for sale. Trying to figure out whether it is or isn’t is, well, impossible right now.
Yesterday, on Citigroup’s fourth quarter earnings call, John C. Gerspach, chief financial officer of Citigroup, was asked by a Barclays Capital analysts for his “thoughts around the ultimate outcome for that unit.”
John C. Gerspach said:
Well, OneMain Financial, again, that’s a unit that we’d like to find a buyer for. And I think that, that’s where that’s going to stay. It’s a business that’s a good business. You take a look at the — some of the information we give you in the appendix slides, it’s generating positive pretax income now for several quarters in a row, but it’s just not a business that we see fitting with the strategy of Citicorp. So it’s hard to see how we would just suddenly decide to make a transfer of that into Citicorp. That’s just one that we’re going to have to find the right buyer at the right time and deal with it that way.
That completely contradicts recent reports from Bloomberg that indicate OneMain is no longer for sale. OneMain, which is the old Commercial Credit unit so loved by Sandy Weil, has been for sale for the better part of a year. Citigroup valued the company at about $2 billion, net of liabilities, people briefed on the bidding said last March, according to Bloomberg.
Suffice it to say, it is only a matter of time before Citigroup realizes that it should retain OneMain. Despite its warts, subprime lending remains a lucrative business. Does Citi actually expect to build another $2 billion venture soon? I am sure you know the answer to that question.