Principal Sells Mortgage Unit To Citigroup
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Principal Financial Group Inc. has agreed to sell its mortgage banking unit to Citigroup Inc., New York, for $1.3 billion.
The Des Moines insurers mortgage unit, Principal Residential Mortgage Inc., reported $29 million in net income for the first quarter on $256 million in revenue.
But the mortgage industry is cooling off, revenue at Principal Residential is down, and Principal Chairman J. Barry Griswell says selling the mortgage unit will help Principal focus on selling retirement plans and employee benefits to small and midsize companies.
"While this was not an easy decision to make, we are now better positioned to focus our resources on our core growth businesses," Griswell says.
Principal hopes to invest $710 million in after-tax net proceeds from the deal in "strategic acquisitions" as well as in expansion of the remaining operations, Principal says.
