Citigroup is in negotiations with Legg Mason on deal that could result in the sale of the New York bank's asset management business, or perhaps an outright swap in exchange for the Baltimore fund firm's 1,540-person brokerage unit.

According to reports published yesterday by the New York Times and Bloomberg that cite unidentified sources, the two companies are at an advanced stage in their negotiations. Officials at both companies declined to comment.

The unidentified sources, however, say a third option, where Citigroup would conduct an outright purchase of Legg Mason's brokerage house, is also on the table.

Whatever the outcome, the alleged negotiations signal yet another step in Citigroup's effort to shed non-core business and its further withdrawal from Chairman Sanford Weill's 15-year vision of creating a one-stop, financial services supermarket.

"I'm not sure the notion of a financial supermarket is less valid, but supermarkets have many aisles and sometimes you're better off using more shelf space on a smaller group of items that sell better," said Marshall Front of Chicago 's Front Barrett Associates, which holds 900,000 Citigroup shares, in the Bloomberg report.

Richard X. Bove, an analyst at Punk Ziegel & Co. in Pinellas Park , Fla. , added that if Citigroup were to shed its asset management business, "It would be a staggering win for Legg Mason and it would be a staggering piece of misjudgment for Citigroup."

According to Bloomberg, Citigroup's asset management unit posted a first-quarter profit of $79 million and has $459.5 billion under management. Its Smith Barney brokerage unit, meanwhile, earned $195 million in the same period.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

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