In many respects we have seen this scenario already play out here in the US with Fannie Mae (NYSE: FNM), Freddie Mac (NYSE: FRE) and AIG (NYSE: AIG) where the government has purchased through various securities a controlling interest in these entities. And in the UK, the British government now "owns" (and today consolidated) both Royal Bank of Scotland (NYSE: RBS) and Lloyds (NYSE: LYG).

What happens with nationalized entities is tough to generalize, although as quick look at AIG's press releases since the US Government came in would suggest that divestitures of valuable non-US businesses is clearly a priority. Also, and not intending to condemn Citigroup (NYSE: C) to the list, but I also think that we are likely to see some form of the Citibank/Citiholdings structure will be adopted for nationalized banks where good operating businesses are separated from bad assets and discrete businesses to be sold (such as Smith Barney).

At the end of the day, though, what happens depends largely on the number of institutions nationalized both here in the US and abroad. While governments are not eager to be operators of undercapitalized institutions, they also do not want to be saturating the market with a global garage sale of business units. At the same time, though, there is enormous local political pressure to retrench (link in my prior piece on this) so, again foreign unit sales are likely to take greatest priority.

In any case, though, I would expect that should nationalization expand, we should expect to live with it for a period of years, not months or weeks.