2. DISCONTINUED OPERATIONS
The following Discontinued operations are recorded within the Corporate/Other segment.
Sale of Brazil Credicard Business
On December 20, 2013, Citi sold its non-Citibank branded cards and consumer finance business in Brazil (Credicard) for approximately $1.24 billion. The sale resulted in a pretax gain of $206 million ($325 million after-tax). In the fourth quarter of 2013, certain expenses related to Credicard were recognized by Citi in Income (loss) from discontinued operations. The net impact of these expenses and the gain on sale was an after-tax benefit of $189 million recorded in Corporate/Other. Citi retained its Citi-branded and Diners credit cards, along with certain affluent segments currently associated with Credicard, which will be re-branded as Citi. Previously, Credicard had been part of the Global Consumer Banking segment and had approximately $3.5 billion in assets prior to the sale.
Credicard is reported as Discontinued operations for all periods presented.
Summarized financial information for Discontinued operations for Credicard follows:
|
In millions of dollars |
|
2013 |
|
2012 |
|
2011 |
| |||
|
Total revenues, net of interest expense(1) |
|
$ |
1,012 |
|
$ |
1,045 |
|
$ |
1,022 |
|
|
Income (loss) from discontinued operations |
|
$ |
(48 |
) |
$ |
110 |
|
$ |
(98 |
) |
|
Gain on sale |
|
206 |
|
— |
|
— |
| |||
|
Income taxes (benefits) |
|
(138 |
) |
19 |
|
(54 |
) | |||
|
Income (loss) from discontinued operations, net of taxes |
|
$ |
296 |
|
$ |
91 |
|
$ |
(44 |
) |
(1) Total revenues include gain or loss on sale, if applicable.
Cash Flows from Discontinued Operations
|
In millions of dollars |
|
2013 |
|
2012 |
|
2011 |
| |||
|
Cash flows from operating activities |
|
$ |
197 |
|
$ |
(205 |
) |
$ |
28 |
|
|
Cash flows from investing activities |
|
(207 |
) |
195 |
|
(44 |
) | |||
|
Cash flows from financing activities |
|
— |
|
16 |
|
— |
| |||
|
Net cash provided by discontinued operations |
|
$ |
(10 |
) |
$ |
6 |
|
$ |
(16 |
) |
Sale of Certain Citi Capital Advisors Business
During the third quarter of 2012, Citi executed definitive agreements to transition a carve-out of its liquid strategies business within Citi Capital Advisors (CCA). The sale occurred pursuant to two separate transactions, creating two separate management companies. The first transaction closed in February 2013, and Citigroup retained a 24.9% passive equity interest in the management company (which is held in Citi’s Institutional Clients Group segment). The second transaction closed in August 2013.
This sale is reported as Discontinued operations for the second half of 2012 and 2013. Prior periods were not reclassified due to the immateriality of the impact in those periods.
Summarized financial information for Discontinued operations for the operations related to CCA follows:
|
In millions of dollars |
|
2013 |
|
2012 |
| |
|
Total revenues, net of interest expense(1) |
|
$ |
74 |
|
60 |
|
|
Loss from discontinued operations |
|
$ |
(158 |
) |
(123 |
) |
|
Gain on sale |
|
62 |
|
— |
| |
|
Benefit for income taxes |
|
(30 |
) |
(44 |
) | |
|
Loss from discontinued operations, net of taxes |
|
$ |
(66 |
) |
(79 |
) |
(1) Total revenues include gain or loss on sale, if applicable.
Cash Flows from Discontinued Operations
|
In millions of dollars |
|
2013 |
|
2012 |
| ||
|
Cash flows from operating activities |
|
$ |
(43 |
) |
$ |
(4 |
) |
|
Cash flows from investing activities |
|
— |
|
4 |
| ||
|
Cash flows from financing activities |
|
43 |
|
— |
| ||
|
Net cash provided by discontinued operations |
|
$ |
— |
|
$ |
— |
|
Sale of Egg Banking plc Credit Card Business
On March 1, 2011, Citi announced that Egg Banking plc (Egg), an indirect subsidiary that was part of Citi Holdings, entered into a definitive agreement to sell its credit card business. The sale closed in April 2011.
An after-tax gain on sale of $126 million was recognized upon closing. Egg operations had total assets and total liabilities of approximately $2.7 billion and $39 million, respectively, at the time of sale.
Summarized financial information for Discontinued operations for the operations related to Egg follows:
|
In millions of dollars |
|
2013 |
|
2012 |
|
2011 |
| |||
|
Total revenues, net of interest expense(1) |
|
$ |
— |
|
$ |
1 |
|
$ |
340 |
|
|
Income (loss) from discontinued operations |
|
$ |
(62 |
) |
$ |
(96 |
) |
$ |
24 |
|
|
Gain (loss) on sale |
|
— |
|
(1 |
) |
143 |
| |||
|
(Benefit) provision for income taxes |
|
(22 |
) |
(34 |
) |
58 |
| |||
|
Income (loss) from discontinued operations, net of taxes |
|
$ |
(40 |
) |
$ |
(63 |
) |
$ |
109 |
|
(1) Total revenues include gain or loss on sale, if applicable.
Cash Flows from Discontinued Operations
|
In millions of dollars |
|
2013 |
|
2012 |
|
2011 |
| |||
|
Cash flows from operating activities |
|
$ |
— |
|
$ |
— |
|
$ |
(146 |
) |
|
Cash flows from investing activities |
|
— |
|
— |
|
2,827 |
| |||
|
Cash flows from financing activities |
|
— |
|
— |
|
(12 |
) | |||
|
Net cash provided by discontinued operations |
|
$ |
— |
|
$ |
— |
|
$ |
2,669 |
|
Audit of Citi German Consumer Tax Group
Citi sold its German retail banking operations in 2007 and reported them as Discontinued operations. During the third quarter of 2013, German tax authorities concluded their audit of Citi’s German Consumer tax group for the years 2005-2008. This resolution resulted in a pretax benefit of $27 million and a tax benefit of $57 million ($85 million total net income benefit) during the third quarter of 2013, all of which was included in Discontinued operations. During 2013, residual costs associated with German retail banking operations resulted in a pretax benefit of $26 million and a tax benefit of $54 million ($80 million total net income benefit).
Combined Results for Discontinued Operations
The following is summarized financial information for Credicard, CCA, Egg, the German tax benefit and previous Discontinued operations for which Citi continues to have minimal residual costs associated with the sales:
|
In millions of dollars |
|
2013 |
|
2012 |
|
2011 |
| |||
|
Total revenues, net of interest expense(1) |
|
$ |
1,086 |
|
$ |
1,106 |
|
$ |
1,374 |
|
|
Income (loss) from discontinued operations |
|
$ |
(242 |
) |
$ |
(109 |
) |
$ |
(75 |
) |
|
Gain (loss) on sale |
|
268 |
|
(1 |
) |
155 |
| |||
|
Provision (benefit) for income taxes |
|
(244 |
) |
(52 |
) |
12 |
| |||
|
Income (loss) from discontinued operations, net of taxes |
|
$ |
270 |
|
$ |
(58 |
) |
$ |
68 |
|
(1) Total revenues include gain or loss on sale, if applicable.
Cash Flows from Discontinued Operations
|
In millions of dollars |
|
2013 |
|
2012 |
|
2011 |
| |||
|
Cash flows from operating activities |
|
$ |
154 |
|
$ |
(209 |
) |
$ |
(118 |
) |
|
Cash flows from investing activities |
|
(207 |
) |
199 |
|
2,783 |
| |||
|
Cash flows from financing activities |
|
43 |
|
16 |
|
(12 |
) | |||
|
Net cash provided by discontinued operations |
|
$ |
(10 |
) |
$ |
6 |
|
$ |
2,653 |
|