Citigroup Inc has divested its private equity unit Metalmark Capital in order to meet the requirements of the Volcker Rule, Bloomberg reported. Citigroup Inc, a diversified financial services holding firm that gives consumer and corporate clients a wide range of financial services, is the third largest US bank in terms of assets.

The report said Citigroup Chief Executive Officer Michael Corbat is among the chiefs of US lenders who are still coming to terms with the Volcker Rule which regulators formally adopted the Volcker Rule this month. The rule aims to stop banks holding federally insured deposits from using shareholder cash to make bets. The rule says banks must not invest over 3% of Tier 1 capital in hedge or private equity funds. It also prevents lenders from owning over 3% of the fund.

In a statement, the two New York-based firms said Metalmark will not anymore be a Citigroup affiliate. However, Citigroup will still retain limited-partner interests in the Metalmark Capital Partners II fund. Financial details and terms of the deal were not provided.

In the statement, Metalmark Chairman and Chief Executive Officer Howard Hoffen expressed his gratitude to Citi for their partnership. He added, "We look forward to continuing our long-term relationship with them as we work to deliver value to our investors."

Citing information from the private equity fund's website, the report said Metalmark looks for investment opportunities in companies focused on the energy and natural resources, healthcare and industrials sector. For its latest fund, Metalmark has $2.5 billion in committed capital. Metalmark was previously housed in the Citi Capital Advisors division which has largely been dismantled by the bank.

Earlier this year, Citigroup spun out an internal hedge fund unit which has an estimated $6.8 billion under management and called it Napier Park Global Capital. It also divested its Citi Venture Capital International unit to Rohatyn Group earlier in 2013, the report said.