Citigroup has swapped its asset management division in exchange for Legg Mason brokers and stock, Bloomberg reports.

In the deal, which will close in the fourth quarter, Citigroup will receive Legg Mason's 1,354 brokers in 127 branch offices throughout 22 states, along with $1.5 billion in stock, or a 14% stake in Legg Mason.

The deal will make Legg Mason the fifth-largest money manager in the U.S., with a total of $830 billion in assets under management, and give Citigroup 14,000 financial advisers and private bankers, on par with Merrill Lynch. "People think of Merrill as really ahead of everyone," noted Ryan Caldwell, an analyst at Waddell & Reed Financial. "That's where Citi is trying to go."

Citigroup CEO Charles Prince has been divesting divisions of the firm, and while the performance of its asset management division has not been strong, Prince has said he was unwilling to make further investments to bolster it. "Our performance in asset management has not been what we had hoped for it to be," Prince told analysts on a recent conference call. "We are not a leader today in that business, and while we could be, devoting the resources needed to make that business a leader for us would be better directed to our other franchises."

In January, Citigroup sold Travels Life & Annuity and much of its international insurance unit.

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