Citigroup- the banking giant which is too big to fall, is also getting too big to manage. Morgan Stanley may pay Citigroup $3 billion for combining their brokerage units quoting sources. Morgan Stanley, led by Chief Executive Officer John Mack, may get 51 percent of the new company and an option to acquire the rest over three to five years. The transaction may be announced tomorrow. The joint venture would overtake Bank of America Corp. as the largest financial adviser to individuals.

Citigroup, which reported $20 billion of  losses in the past four quarters, would get cash for its Smith Barney brokerage, while Morgan Stanley would get recurring fee revenue and more potential banking customers. The joint venture would employ about 22,000 advisers, compared with the approximately 20,000 at Bank of America after its purchase of Merrill Lynch & Co. Morgan Stanley Co-President James Gorman,  50, may oversee the company, tentatively named Morgan Stanley Smith Barney, adds the report.

Citigroup led by chief executive officer Vikram Pandit took $45 billion of U.S. bailout money. The US banking major has been on a major restructuring program and shed their non-core assets. Last year, it sold its captive BPO arm, Citigroup Global Services (CGSL) for $505 million. Also late last year, Wipro Technologies, the global IT services business of Wipro acquired Citigroup's subsidiary, Citi Technology  Services (CTS) formerly called Citos for  $127 million.

After being among the biggest casualties of the subprime mortgage-related meltdown in the West, suffering huge write-downs and shedding jobs and non-core operations, Citigroup finally put its reorganization strategy in place. Citigroup’s Asia business got split geographically into Japan, North Asia, South Asia and Southeast Asia Pacific, and divided across seven product groupings.

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