Big Banks’ Mermaid Problem

Keefe Bruyette & Woods analysts made waves last week by suggesting in a research note a breakup of Citigroup, starting with the sale of international assets like Mexican unit Banamex. Not everyone was buying it. Karen Shaw Petrou at Federal Financial Analytics likened this to becoming a mermaid – a nice idea, but hard to achieve in the real world. To sell off these businesses there must be willing buyers, and “I have not seen home-country banks in emerging economies exactly rolling in dough right now,” Ms. Petrou wrote. What’s more, big global banks that could be buyers, like HSBC, Standard Chartered and Barclays, have their own issues. That leaves possible listings of emerging-market units. But as standalone banks they could suffer from lower credit ratings. This maiden isn’t likely to sprout a tail anytime soon.