INSTANT VIEW: Citigroup to shed $400 billion of assets

NEW YORK (Reuters) - Citigroup Inc, the largest U.S. bank, aims to shed $400 billion of assets over the next two to three years, after being hit hard by the subprime mortgage meltdown and ensuing turmoil.

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COMMENTARY:

HEINO RULAND, EQUITIES STRATEGIST, FRANKFURTFINANZ,

FRANKFURT

"I don't know what kind of assets they're talking about but I have the feeling -- and that is penetrating the entire industry -- that the market for these stressed assets is by far not as bad as it used to be."

"There seems to be a certain degree of stability, that would increase interbank liquidity and would mean central banks are less obliged to effectively inject capital at any minute to overcome the stressed situation in the interbank market."

THANE BUBLITZ, SENIOR EQUITY RESEARCH ANALYST, THRIVENT

FINANCIAL, APPLETON, WISCONSIN

"Citigroup is not going to get a pass like they may have gotten at certain points in the past. It's definitely going to be a show me story.

"Something has to be done, and he's (Pandit's) taking action. He's doing things. They need to make a shift in their direction and a cultural change and a structural change.

"They restructured their mortgage business. I think that they will have better controls and a better understanding of all the risks that they had in that business, they're moving toward achieving that. That's an example of what they need to do overall in their organization. The plan looks good in that area."

MIRKO MIKELIC, PORTFOLIO MANAGER AT FIFTH THIRD ASSET

MANAGEMENT IN GRAND RAPIDS, MICHIGAN

"It's not going to be business as usual like the prior Citi, having a lot of far flung businesses. Citi will probably have to be more focused going forward and getting out of markets that have hurt them in the past.

"There are a lot of assets that frankly, they can't punt, because there's no bid for them. It's easy to say you want to sell the business lines or assets that are underperforming, but it will be tough to get a bid. It's tough to get financing just for regular M&A deals."

"I think the big issue is how many more writedowns. I think that's what's spooking investors. The problem is how much more capital do these guys need? There have been a lot of writedowns already. The problem is if you want to punt those, who is going to buy them?"

JEAN-MARIE EVEILLARD, PORTFOLIO MANAGER, FIRST EAGLE FUNDS,

NEW YORK

"Size is not necessarily providing a tremendous advantage. Finance, to some extent is a commodity business. The returns on capital, the returns on equity at 20 to 25 percent, I don't think that's coming back."

"It's a business where one bank does not truly have a sustainable competitive advantage over another bank. The only sustainable competitive advantage are the banks that don't follow the herd, but there are very few of them.

"The share of corporate profits overall in the U.S. that was accounted for by financial company profits had grown tremendously. It had become a financial economy at the expense of industry and commerce, and that's over."

PAUL NOLTE. DIRECTOR OF INVESTMENTS, HINSDALE ASSOCIATES,

HINSDALE, ILLINOIS

"The crisis is not yet over -- see also AIG -- and many more financial institutions will be needing to raise capital to shore up balance sheets. So far, there has been an appetite for the capital. Unfortunately, we will see more of this in the future -- a few like today and then nothing for a while -- then a few more."

"Keep an eye on real estate, once that begins to turn -- inventory levels decline, prices begin to firm -- then you will see the banking issues perform better and we will begin to talk about the worst being over."

HENRY ASHER, PRESIDENT OF NORTHSTAR GROUP, A NEW YORK-BASED

MONEY MANAGER

"In the best of all possible worlds, you buy low and sell high. Here, they are selling when they have to. I'm sure they will do their best to create interest in each asset sale, but I don't see them having the strong hand. Whatever buyers are out there have more negotiating power."

"It's a net positive for Citi just to shrink. It's too big for management to get their hands around. No one could possibly go into that situation and quickly and completely understand all the nuances of such a sprawling business."

"There's no shortage of brain power, but how good is the decision making? The banks that are doing the best today are run by bankers. Look at Jamie Dimon and JPMorgan -- that shows that it's possible to be done and done well."

(Reporting by Jessica Hall in Philadelphia and Kristina Cooke, Megan Davies and Herb Lash in New York and Amanda Cooper in London, compiled by Tiffany Wu)