Citi’s simplification comes with extra cost, says Wells Fargo

Wells Fargo says that Citi’s (C) simplification comes with an extra cost. The sale of 1/4 of MX Consumer at 0.95 TBV is less than expected but gives Citi an anchor investor whose stake, partnership, and endorsement could aid a more complete separation at higher prices later on, the firm argues. In an 8-K after the close, Citi announced the sale of 1/4 of Banamex for $2.3B to a MX national who will become the Chair of the Board of Banamex. This implies a franchise value for less than Wells expected — estimated $9B vs. $11B — and comes with a goodwill write-down of $726M. The firm has an Overweight rating on Citi with a price target of $125 on the shares.