Cerberus Capital Management LP and Centerbridge Capital Partners LLC are among firms bidding for Citigroup Inc.’s U.S. consumer-lending unit, said three people with knowledge of the matter.

Cerberus and Centerbridge are competing with at least three other parties for the Baltimore-based OneMain Financial unit, previously known as CitiFinancial, said the people, who declined to be identified because the matter is private. A group that included Warburg Pincus LLC withdrew from the process, one person said.

Citigroup Chief Executive Officer Vikram Pandit, 54, started an auction for OneMain this year after tagging the business for sale in 2009 as part of a strategy to offload $600 billion of the New York-based bank’s unwanted assets. About $13 billion of OneMain assets are included in the auction, people with knowledge of the matter said last month. The book value of the business is about $2 billion, net of liabilities, they said.

Spokesmen for Cerberus and Centerbridge declined to comment.

Cerberus, led by founder Stephen Feinberg, recently hired former Lightyear Capital LLC dealmaker David Glenn to pursue financial-services acquisitions.

Robert Willumstad, 65, Citigroup’s former president, is leading a separate bidding group through his Brysam Global Partners, people familiar with the matter said last month. That group includes Blackstone Group LP, Carlyle Group, Thomas H. Lee Partners LP and WL Ross & Co., according to the people.

Apollo Management

Private-equity firms Apollo Management LP and J.C. Flowers & Co. also are working on a joint bid, the people said. Apollo is already in the mortgage business -- a part of the OneMain portfolio -- through its 2008 investment in Vantium Capital, which buys residential mortgage assets.

Another bidding group includes Clayton, Dubilier & Rice LLC and Toronto-based Onex Corp., the people said.

OneMain lends money for purposes including auto and appliance repair, medical bills and remodeling kitchens, according to its website. Before the unit was rebranded in December, the website carried the tagline: “Money for life’s emergencies or just fun.” This has since been changed to “money for life’s emergencies,” Mark Rodgers, a Citigroup spokesman, said in an e-mail.

OneMain, which traces its roots to the founding of Commercial Credit in 1912, has posted $1.3 billion in pretax losses since the second quarter of 2009, according to a Citigroup presentation. The unit’s customers struggle to get loans elsewhere, Pandit said during a July conference call.

‘Last Ones Standing’

“We’re one of the last ones standing to serve an entire clientele that really doesn’t have access to those products and services,” Pandit said at the time. “This is a clientele which is going to need credit and our services. They don’t have places to go.”

Banks are paring consumer-lending operations as the businesses, which cater to middle- and low-income customers, may draw more scrutiny from regulators, said Lawrence D. Kaplan, a Washington-based attorney with Paul, Hastings, Janofsky & Walker LLP. Wells Fargo & Co., the fourth-biggest U.S. lender by assets, said last year it would cut 3,800 jobs and shut its consumer-finance branch network.

“Banks are clearly examining how to restructure their businesses to avoid potential additional regulation by the new consumer protection agency and weighing whether to exit activities that are on regulators’ radar, which is spurring some of these asset sales,” Kaplan said.