Citi Eyes Argent Deal.

NEW YORK -- Citigroup has inked a deal that gives it an "option" to buy subprime wholesale giant Argent Mortgage, Orange, Calif., and the $65 billion servicing platform of its sister company, Ameriquest Mortgage.

If Citigroup winds up taking over Ameriquest's portfolio of A- to D receivables it will become the nation's largest subprime servicer with $129 billion in product.

One veteran investment banker, requesting anonymity, described the servicing platform as the "crown jewel" of Ameriquest. The unit is based in Illinois, the rest of the firm in California.

At year-end, Countrywide Financial Corp., Calabasas, Calif., ranked second among subprime servicers with $119 billion, according to figures compiled by the Quarterly Data Report.

Both Ameriquest Mortgage (the retail arm) and Argent (wholesale) are owned by ACC Capital Holdings, a company controlled by mortgage industry veteran Roland Arnall who is currently serving as U.S. ambassador to the Netherlands. Mr. Arnall himself, whose wife chairs ACCCH, also will pump money into the company's ailing mortgage units but it was not disclosed how much.

In a press statement, ACCCH revealed that Citigroup not only has an option to buy Argent and the $65 billion in receivables, but is providing "additional working capital" to ACCCH's subprime units, becoming their primary warehouse lender.

Citigroup - a top-ranked subprime lender and servicer itself - also will buy most of Argent's whole loan production, a move that will help the bank's trading desk.