Since the 1980s, Sandy Weill spent billions on deal-making to build the Citigroup (NYSE: C) empire. Now it is in the process of being dismantled. The company has little choice as it must deal with its precarious capital base (the firm is the beneficiary of $45 billion in federal government loans).

So this week, Citigroup announced a deal to sell a variety of its Nikko units to Sumitomo Mitsui Financial Group for roughly $7.9 billion or 774.5 billion yen. Keep in mind that Citigroup purchased the division in 2007 for 1.6 trillion yen. Yes, it's a big-time haircut.

Nikko is a major player in the Japanese marketplace, with operations in brokerage and underwriting. In fact, the sale is going to be a game-changer in Japan as Sumitomo will have now more scale against rivals like M.U.F.G. and Mizuho Financial Group.

Citigroup (NYSE: C) is the result of grand ambitions of a Wall Street dealmaker, Sandy Weill. But, of course, this week things came to an end as the company announced a dramatic dismantling of the global financial empire.

The bank's CEO, Vikram Pandit, has little choice. After all, Citigroup's stock continues to plunge, with the market cap at a lowly $19 billion.

But the new strategy has a big problem: In light of the continued dangers in the banking system -- such as Bank of America's (NYSE: BAC) horrible experience with its purchase of Merrill Lynch -- it's going to be tough to find willing buyers of Citigroup's far-flung assets. The asset sales are likely to be prolonged and priced at distressed levels.

Interestingly enough, despite the urgency for change, Citigroup has indicated that certain assets are off-limits, such as the Nikko Cordial Securities unit (the #3 brokerage operation in Japan) and Grupo Financiero Banamex SA (the banking platform in Mexico). This was the situation just three days ago.

No doubt, these assets are key for the growth of Citigroup. Right?