Should Citi be carved up? Prince says no way, Jose!

That is the question posed in the latest cover story from Barron’s, which suggests that shareholders of Citigroup may demand radical change, including a possible dismantling of the company, if its stock continues to languish. A money manager at a small firm suggests that Citi might be worth $66 per share, or nearly 40 percent above its current value, if it were split into a United States-based retail bank, an international bank and a global investment bank.

But Citigroup’s chief executive and newly installed chairman, Charles Prince, thinks the notion is absurd on its face. He tells Barron’s:

“Breaking up Citigroup is the dumbest idea I’ve ever heard of,” says Prince, who wears cufflinks with the emblem of Citigroup progenitor First National City Bank, which traced its roots back to 1812. “You would take a franchise that people have worked almost 200 years to build, and break it up into two or three parts, only to see the parts acquired by others. The real question is: What would our competitors pay to be able to duplicate what we have?”

Saudi Arabia’s Prince Alwaleed Bin Talal, Citigroup’s largest shareholder, is also quoted as saying he opposes the idea of a breakup.

On his blog on Wednesday, Chad Brand of Peridot Capital Management, a small money management firm, said that Mr. Prince’s “blatant dismissal of the idea doesn’t bode well for investors.” Pretty swift on the uptake, Sherlock.

http://dealbook.blogs.nytimes.com/?p=4950