Citigroup even less likely to break up after all

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Off and on since 2007, people have cried for big banks to break themselves up in order to unlock shareholder value and to end the "too big to fail" controversy once and for all.

Last year saw a spate of calls to break up the banking conglomerates, including a few from surprising sources. That Sandy Weill, the builder of modern Citigroup (NYSE:C), would agree publicly that big banks should break up was treated as major news.

But it's not likely to happen. The fact is that the stock prices of the biggest banks have been on a tear, led by Bank of America. As long as that trend remains intact, the calls will subside.

In addition, Dow Jones points out that Citigroup chairman Michael O'Neill has changed his tune a bit, deciding that a break up wouldn't be a good idea after all. O'Neill "was among a small group of directors who after the financial crisis urged the company to weigh splitting up the third-largest U.S. bank, said people familiar with the deliberations. Mr. O'Neill, now chairman, has reshaped the New York company over the past year, overseeing a management shake-up and backing a broad cost-cutting plan. But exploring a breakup is no longer among his top priorities."

You have to wonder if a true break-up was ever seriously considered at the bank. The challenges would be significant.

"Deciding which entities would retain the banking licenses is one complication. Other deterrents include the large amount of money that would be required to fund units such as the investment bank as stand-alone enterprises and unwinding unwieldy legal structures that include thousands of entities. Citigroup is also hesitant to break up a global network that would be hard to replicate."

All that said, if the stocks ever retrace their recent gains, we'll no doubt hear the "break up" chorus all over again.

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