According to sources who told the Wall Street Journal, Citigroup Inc. sold over USD6 billion in hedge fund and private equity assets last month. The asset sales were said to be necessary in order to comply new regulations on alternative investment holdings of banks.
The "Volcker rule", which would be finalized, would prohibit banks on investing funds that they do not manage. Also, the rule would limit how much money could banks invest in hedge funds and private equity. The limit that was established was at 3% of high-quality tier one capital.
Although implementation of the "Volcker rule" would most likely be done within the next few years, Citigroup sold its private equity and hudge funds as early as August 9. The same sources told Wall Street Journal that Citi sold its USD1.9 billion emerging markets hedge fund to the fund's managers on August 9. Last week, Citi sold its USD4.3 billion Citi Venture Capital International, a private equity fund, to Rohatyn group, which is run by Nick Rohaytyn, for an undisclosed price.
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