Feb. 24 (Bloomberg) -- Housing Development Finance Corp. is headed for the biggest drop in more than two years in Mumbai trading after Citigroup Inc. sold its remaining 9.9 percent stake in India’s largest mortgage lender.

The U.S. bank sold 145.3 million shares of the Mumbai-based company for 95.5 billion rupees ($1.9 billion), or 657.56 rupees apiece, it said in a statement today. The sale represents a discount of 6.2 percent to the stock’s closing price yesterday. HDFC fell as much as 6.3 percent, heading for the biggest one- day loss since July 6, 2009.

“The share performance is just because of a knee jerk reaction to the stock being sold at discount in today’s block deal,” said Alex Mathews, head of research at Kochi, India- based Geojit BNP Paribas Financial Services.

Shares of HDFC were trading down 4.7 percent at 668.7 rupees as of 12:18 p.m. in Mumbai. The mortgage lender had gained 7.6 percent up to Feb. 23, compared with a 17 percent rise in the benchmark Sensitive Index this year.

Citigroup joins European and U.S. banks including HSBC Holdings Plc and Goldman Sachs Group Inc. in selling Asian assets as global rules for higher risk buffers force lenders to boost capital. Citigroup, the third-largest U.S. lender by assets, also plans to raise as much as $20 billion in debt this year to make payments on a 2008 emergency credit program.

Difficult Markets

“Banks globally are currently under pressure to boost capital, and asset disposals make sense as the current environment makes fundraising from capital markets difficult,” said Lewis Wan, Hong Kong-based chief investment officer of Pride Investments Group Ltd., which manages $250 million of assets. “The fundamentals of U.S. banks and European banks are relatively weaker than that of Asian banks.”

Citigroup said in June it was reducing its stake in Mumbai based HDFC to 9.9 percent, from 11.4 percent, in preparation for meeting the Basel III capital rules. Today’s sale is part of Citigroup’s ongoing capital planning efforts, it said in a statement. The bank managed the latest share sale.

“The demand for HDFC shares in today’s sale was very strong and that clearly indicates the appetite among investors for the stock,” said Mathews. India’s central bank may reduce interest rates and HDFC’s home loans-business stands to benefit, he said.

--Editor: Chitra Somayaji

To contact the reporters on this story: Ruth David in Mumbai at rdavid9@bloomberg.net; Sam Nagarajan in New Delhi at samnagarajan@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

Feb. 23 (Bloomberg) -- President Barack Obama’s belief that the U.S. tax system pushes jobs overseas and Republican assertions that multinational companies are disadvantaged will make compromise on a new corporate tax code difficult.

Even as business groups and Republican lawmakers praised the administration’s call yesterday for a lower corporate tax rate, they insisted that ending most taxes on foreign profits is an essential part of what ought be a larger overhaul of the tax code.

The gulf between the two sides on international taxation will be difficult to bridge if and when the Obama administration and Congress begin serious negotiations on the tax code.

“That’s oceans away, just miles and miles away,” said Bruce Thompson, a Washington tax lobbyist at Van Scoyoc Associates. “Just two different concepts.” His clients include a coalition of companies that market and sell fuel with 85 percent ethanol.

U.S. companies now owe U.S. taxes on all their profits. They can claim credits for taxes paid to foreign governments and defer U.S. taxation until they repatriate the money.

The administration wants to retain that “worldwide” tax system. The administration proposal would make it harder for companies to defer income. In addition, the new framework announced yesterday mentions adding a minimum tax on global income, without providing details on how the tax would work.

“By imposing a minimum tax, you’re creating winners and losers from the get-go,” said Dorothy Coleman, vice president of tax and domestic economic policy at the National Association of Manufacturers in Washington, whose members include Caterpillar Inc. and Devon Energy Corp.

Multinational ‘Discrimination’

Companies operate outside the U.S. to serve overseas markets, and “it is discriminating against companies depending on where they locate,” she said.

In contrast to the administration’s plan, a territorial tax system like the one proposed by Republican Representative Dave Camp would exempt most foreign profits from U.S. taxation. The proposal by Camp, who heads the House Ways and Means Committee, includes options to prevent companies from shifting profits out of the U.S.

Multinational corporations have been urging Congress to adopt a territorial system because they say it would let them compete in growing foreign markets without a residual home- country tax that other companies don’t face.

“How do you go from a territorial system on the Camp side to the worldwide and figure out a way to meet in the middle?” asked Catherine Schultz, vice president for tax policy at the National Foreign Trade Council, which advocates an open world economy.

Unyielding Position

In the corporate tax framework released yesterday, the White House and the Treasury Department emphasized their opposition to a “pure territorial” system.

“If foreign earnings of U.S. multinational corporations are not taxed at all, these firms would have even greater incentives to locate operations abroad or use accounting mechanisms to shift profits out of the United States,” the administration said in its document. “Furthermore, such a system could exacerbate the continuing race to the bottom in international tax rates.”

The divide on international taxation is one of many issues that would need to be bridged as part of a tax code rewrite. The administration and Republicans also disagree on the total amount of revenue that should be raised; on how to treat business owners who pay taxes through the individual tax code; and on which tax breaks to retain in a new system.

Tax Breaks

The administration’s framework called for dropping the business tax rate to 28 percent and removing tax breaks to help offset the revenue loss. Obama would retain tax breaks for corporate research, domestic manufacturing and renewable energy.

The president’s plan also would raise revenue by lengthening depreciation schedules, limiting the deductibility of interest and changing how large partnerships are taxed. None of those proposals included details on how they might work or how much money each one would contribute toward offsetting the rate reduction.

The outline includes provisions that Obama has tried to advance in his budgets for several years, including ending oil and gas tax breaks, eliminating the last-in, first-out accounting method and taxing the carried interest of private equity fund managers as ordinary income instead of capital gains. He would ask Congress to let $250 billion of expiring business tax breaks lapse or be offset with revenue elsewhere.

Camp favors a corporate tax rate target of 25 percent. The Michigan Republican hasn’t said what tax breaks he would eliminate to offset the cost of a rate reduction. The remaining Republican presidential contenders have proposed top corporate tax rates of between 12.5 percent and 25 percent.

Common Ground

Despite the differences between the Obama and Camp proposals, there is common ground, said Edward Kleinbard, former chief of staff of the congressional Joint Committee on Taxation.

He called the administration’s plan “a little skinny on detail” and said there are conceptual differences, particularly on international taxation.

Still, Kleinbard said, “If you line it up next to Dave Camp’s proposal, you could say these are two reasonable men working toward roughly similar goals, and you could put them in a room and two or three days later they’d emerge with a deal.”

Election-year pressures and the no-tax-increase stances of Republicans make an agreement hard to reach, Kleinbard said.

Thompson, the former senior director of global government relations at Merrill Lynch & Co., said Obama’s embrace of a tax code overhaul will prompt Republicans to advance more specific proposals of their own, perhaps leading to a rewrite next year.

“Every step forward, I think, leads you ultimately to a tax reform bill, not necessarily this year,” he said. “It’s a mistake to think that this is all going to fizzle and it’s not going to go any place.”

--Editors: Katherine Rizzo, Jim Rubin.

To contact the reporter on this story: Richard Rubin in Washington at rrubin12@bloomberg.net

To contact the editor responsible for this story: Jodi Schneider at jschneider50@bloomberg.net

Feb. 21 (Bloomberg) -- Grubb & Ellis Co., a U.S. real estate services company, agreed to sell almost all its assets to BGC Partners Inc. and filed for bankruptcy protection.

Grubb & Ellis listed assets of as much as $500 million and liabilities of up to the same amount in the Chapter 11 filing in U.S. Bankruptcy Court in New York yesterday. The company said it completed about 12,000 sale and lease transactions last year and manages more than 250 million square feet of property.

“We determined that a partnership with BGC provides the best platform for our brokerage professionals, employees and clients,” Thomas P. D’Arcy, chief executive officer of Grubb & Ellis, said in a statement yesterday. “We expect no disruption to the company’s operations.”

The Santa Ana, California-based company blamed the downturn in the U.S. real estate market between 2007 and 2009 for losses during the period that it said severely strained its liquidity and hampered its ability to keep operating, according to a court filing. Grubb & Ellis failed to find a buyer outside the bankruptcy process, Chief Financial Officer Michael Rispoli said in the filing.

BGC Partners, a New York-based broker of financial products, agreed to provide a loan of as much as $4.8 million to Grubb & Ellis to keep it operating during the bankruptcy process, Rispoli said.

The case is: In re: Grubb & Ellis File No. 12-10685. U.S. Bankruptcy Court for the Southern District of New York (New York).

--Editors: Lena Lee, Dave McCombs

To contact the reporter on this story: Joe Schneider at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net