Citigroup Inc., the second-largest US bank by assets, is weighing a sale of all or part of the company, including the Smith Barney brokerage, the credit card unit and the transaction services unit, after its stock lost 50% this week, the Wall Street Journal said late Thursday, citing people familiar with the matter. Internal discussions are at a preliminary stage, and a formal board meeting is set for Friday, though Chief Executive Vikram Pandit remains loath to sell units, the newspaper said, citing the people. Morgan Stanley is not considering a possible bid, the newspaper said. Citigroup did not comment on the report, repeating that it has a “very strong capital and liquidity position” and is focused on a strategy that will generate benefits “over time.” Morgan Stanley did not immediately return The second-largest US bank by assets lost more than one-quarter of its market value Thursday on growing worries over whether it has enough capital to withstand billions of dollars of potential losses and despite new support from its largest individual investor. Earlier Thursday, Prince Alwaleed Bin Talal said he plans to increase his stake in Citigroup to 5 percent from less than 4 percent, calling its shares “dramatically undervalued.” Prince Alwaleed expressed “full and complete support” for management, including Pandit, who said this week the bank will slash 52,000 jobs and 20% of expenses. Investors were unimpressed, and drove the bank's shares below US$5, a level not seen since 1994. The market value of Citigroup has fallen US$48.7-billion this month alone. Citigroup is not seeking any government financial aid, and is not seeing any unusual business activity, a person close to the bank said. But government aid may have to be part of any deal for Citigroup, investors said. Raising capital, whether through a share sale or selling businesses, would be difficult in the current environment. Citigroup “will get bailed out, and that's another unfortunate strain on the US government,” said Saj Karim, an investment adviser at Cannacord Capital in Waterloo, Ont. Analysts said the bank could face more than $20-billion in losses in 2009 on commercial real estate, credit cards and emerging markets, as the world economy sinks into recession. Citigroup's market value, which once topped $270-billion, fell to $25.7
