Citigroup losses masked by Smith Barney gain
By Joseph A. Giannone
Fri Jul 17, 2009 3:23pm

* Smith Barney deal yields $11.1 bln pretax gain
* Citicorp earned $3.06 billion, fueled by trading
* Citigroup shares little changed
* Credit costs surge 81 pct to $12.4 billion (Adds detail, background, writes through)

NEW YORK, July 17 (Reuters) - Citigroup Inc (C.N) on Friday said loan losses surged again in the second quarter, yet gains from selling most of its Smith Barney brokerage helped the company report the highest profit among big U.S. banks.
Citigroup, twice deemed too big to fail by the U.S. government during the past year, recorded an $11.1 billion pretax gain from selling Smith Barney into a joint venture with Morgan Stanley's (MS.N) brokerage unit. Citi received a 49 percent stake in the venture and cash.
The deal boosted Citi's net income to $4.28 billion, or 49 cents a share, compared with a year-earlier loss of $2.50 billion, or 55 cents. That surpassed the $2.7 billion profits reported this week by both Goldman Sachs Group Inc (GS.N) and JPMorgan Chase & Co (JPM.N).