GLOBAL – Citigroup and Legg Mason are in talks about swapping their asset management and brokerage businesses, according to a Bloomberg News report today.
The news agency, citing people familiar with the talks, said New York-based Citigroup was close to making an agreement to swap its asset management division for Baltimore-based Legg Mason’s brokerage business. It said the deal was valued at around $4bn.
Under such a deal, Legg Mason would become the fifth-largest US asset manager, with around $830bn under management, Bloomberg said.
“We do not have any comment on the Bloomberg story,” said Legg Mason spokeswoman Alison Mackley. Citigroup spokespeople in London were not able to comment and New York spokeswoman Shannon Bell was not immediately available.
Legg Mason says it is the 15th largest manager of institutional pension funds in the world, with $140.4bn of such assets under management as at the end of last year.
Citigroup’s former chief executive Sandy Weill dropped a hint about the outlook for asset management in the bank’s 2004 annual report.
He said that the emergence of ‘open architecture’ had made it obvious that “distribution is the more powerful asset, with potentially higher returns at times than manufacturing”.
In April Citigroup reported that first-quarter net income at its asset management business fell 25% to $79m (€61.5m), with revenues at the division down 10%. But executives said the figures did not present the true picture of the business.
"We have been awarded mandates from clients in both institutional and fund-of-funds over the last six months and we see this as a very positive indication of continued growth potential in this region", John Nestor, head of Citigroup's asset management business in Europe, told IPE at the time.