Citi's Still Got a Long Way to Go

NEW YORK (TheStreet) -- Citigroup(C Quote) posted a small profit for the third quarter, but investors trying to wind their way through the labyrinth of the company's balance sheet will find that the good bank won't be able to significantly grow until the bad bank goes away.

Factor in the company's continued reliance on the government -- its biggest shareholder -- and the message is reinforced that Citi looks to be unable to grow its business until it can stand on more solid ground.
The inability to expand is particularly harrowing considering that other big banks including Goldman Sachs (GS Quote), JPMorgan Chase (JPM Quote) and others are already posting strong profits.

Citi, on the other hand, received $45 billion in government bailout funds since the start of the financial crisis, and completed a $58 billion preferred-to-common stock deal this summer. The transaction makes the U.S. government, which converted some $25 billion of preferred shares, a 34% stakeholder in Citi, and as a result of the government's heavy hand, Citi has been forced to pare down its businesses and assets in response to regulators' expressed concerns on Citi's capital levels.
Citi said Thursday that as a result of its extenuating factors, combined with a continued uncertain economic environment, it is only making "selective investments" in faster growth businesses.

"[O]ur two near-term goals are getting to the point where we have sustained profitability and looking to repay TARP," CFO John Gerspach said on Citi's conference call with analysts earlier today.

"Obviously, by returning to sustained profitability as I said, we are looking to make selective investments," Gerspach continued. "So we have begun to deploy some level of additional capital and expense dollars into our Citicorp businesses. But again, we are doing that in the looking ahead at a rather uncertain economic environment, so we want to be very selective on that, at least in the near term."
Citi posted a third-quarter per share loss of 27 cents, despite making a small profit of $101 million, primarily due to the impact of the stock swap on retained earnings and the payment of government-held dividends.

Citi is having a monster of a time digging through its morass of shoddy mortgages and credit card loans gone bad, particularly as the health of the U.S. economy -- with unemployment hovering around 10% -- remains uncertain. The company has previously said it would cease offering private label retail credit cards as part of its restructuring, and it's also backing away from much of the mortgage business.
On Thursday, Citi disclosed that three quarters of its consumer loan losses were from North America.

During the conference call, CEO Vikram Pandit pointed to regulator discussions concerning elevated levels of capital for financial institutions going forward, something that Citi and other big banks will have to eventually adhere to.
Citi is also further inhibited by the fact that it needs to eventually pay back bailout funds received from the Troubled Asset Relief Program, he said. Questions regarding when Citi will pay back the TARP money have intensified lately. The company did not offer any further information Thursday saying when it would do so.
"We need to get through that, but clearly we are running the company to have more capital than that over time and if that does happen, that can open up a lot of different possibilities for us and it is really too soon to comment on it," Pandit said.

Citi is making progress in its turnaround mission, even if it is likely at the behest of regulators. Citi Holdings, the so-called bad bank, reduced its assets by $32 billion in the quarter to $617 billion. The company reduced its toxic assets by $19 billion in the quarter between asset sales and run off. Still, assets in Citi Holdings are down less than 10% since the first quarter -- the same time the company announced the splitting of the two businesses.

Citi Holdings' assets are expected to decline by at least another $25 billion in the fourth quarter and the company officially completed the sale of Nikko Cordial and Nikko Asset management on Oct. 1.

But as a result of regulators tightening of the belt, the company has also been forced to leave behind some profitable businesses as well.
Citi completed a joint venture with its profitable wealth management arm Smith Barney and Morgan Stanley (MS Quote) in early June. As of the third quarter, Smith Barney no longer contributes revenue to Citi, Gerspach said. The business had contributed $1 billion in revenue in the prior quarter.

Phibro, the company's energy trading unit, which was just sold to Occidental Petroleum Corp. (OXY Quote) had quarterly revenue in the range of $90 million and $100 million, net of pre-tax income, Gerspach also said.

"We do have a business that is going to grow, which is Citicorp, over time and you know it happens to be in those markets and those businesses, which are pretty fast growth and you ought to expect that business to get its share of capital over time," Pandit said.
--Written by Laurie Kulikowski in New York.

Citigroup up 200% in 7 days

Citigroup Chief Executive Vikram Pandit, whose company's share price fell below $1 last week, said it was profitable in the first two months of 2009.

Citigroup projects it will report $8.3billion in earnings for this year's first quarter, excluding taxes, credit losses and one-time charges.

After the announcement, it share price up from lowest US$0.97 to today US$ 3.08.

But, was it really profitable since it exclude all taxes, credit losses and one-time charges?

Unemployment Rises may cause another credit crunch wave in bank

（纽约8日讯）美国上月失业率急升至8.1%，今夏更可能直逼双位数，有分析担心，若失业率继续攀升，更多消费者会无法偿还信用卡贷款，引爆另一场信贷危机。


失业率高企更可能引发另一场信贷危机。由于失业及收入减少，消费者拖欠信用卡数的情况愈来愈严重，预计到年底信用卡撇帐率，可能由目前的7.5%升至9%。

国际评级机构惠誉估计，失业率若升至9%，信用卡撇帐额就会增加20%。

据悉，在美国信用卡市场中风险最高的银行，包括美国银行、汇丰银行和花旗集团。

美国2月份流失多达65.1万个职位，经济步入衰退14个月以来，企业已裁减440万个职位，当中制造业、金融服务业及零售业是重灾区。

各主要行业在短时间内有大量职位流失，显示不少企业可能已放弃整个业务。

虽然与次按市场相比，信用卡市场规模较小，但信用卡“毒债”亦已打包成各种衍生投资工具，深入金融市场每个角落，假如信用卡市场崩溃，所造成的冲击绝不低于次按危机，将进一步打击美国经济。

Malaysia Bumi-Commerce Bank overtakes Citigroup

Bumiputra-Commerce holdings Bhd overtaken Citigroup by market value with RM22.2billion compare to Citigroup RM21.2Billion. In US, Citigroup was once the world's biggest bank by market value of US$277.2Billin when share price at US$55.7

Citigroup will not remove from NYSE

Citigroup's shares will remain on the New York Stock Exchange. Last week, the NYSE relaxed its listing rules to allow stocks that fall under $1 to still be listed and traded on the exchange.

The exchange said the change was warranted given the "current period of unusual market volatility and decline."

Ordinarily, an NYSE-listed company's shares cannot remain below $1 for more than 30 consecutive days. If that happens, the company gets about six months to prove to the NYSE it can boost its stock price.

Citigroup shares tumbled 96 cents, or 39%, to $1.50 in 4 p.m

Citigroup shares tumbled 96 cents, or 39%, to $1.50 in 4 p.m. New York Stock Exchange trading Friday, reflecting that current holders of the bank's common stock will hold as little as 26% when the deal is completed.

Some investors were especially rattled by news that Citigroup will stop paying dividends on most of the bank's preferred shares. At many banks, preferred shares have been a haven from the epidemic of dividend cuts and eliminations on common stock. "The cost of doing this with one bank is that it makes shareholders at other banks nervous," said Campbell Harvey, professor of finance at Duke University's Fuqua School of Business in Durham, N.C.

Instead, financial institutions that need to bolster their balance sheets following regulatory "stress tests" now under way at the 19 largest U.S. banks can get new convertible preferred shares from the government or convert existing shares under terms announced by the Treasury Department this past week. The conditions include converting preferred shares to common equity at a 10% discount to the prevailing price as of Feb. 9.

Wall Street also is worried about "whether the company will be run in the interest of private shareholders or for the public good," said John McDonald, a banking analyst at Sanford Bernstein & Co. "It's a valid question what the priorities will look like."

Messrs. Geithner and Pandit began discussing details of the stock-conversion plan last Sunday evening, according to people familiar with the situation. Agreement on a basic framework was reached relatively quickly, but Citigroup and officials from the Federal Reserve, Office of the Comptroller of the Currency, Federal Deposit Insurance Corp. and Treasury then haggled over issues such as what would happen to $20 billion of taxpayer-owned preferred shares not included in the deal.
At times, Citigroup executives grew frustrated by what they viewed as slow responses from Washington. Asked Friday about the back-and-forth of the negotiations, one Citigroup executive responded: "There isn't one. We just wait." Some executives worried that private investors needed to go along with the deal might get cold feet if an agreement wasn't reached quickly.

On Friday, Citigroup said that most of the private institutions that hold a combined $12.5 billion in Citigroup preferred shares have agreed to convert their shares to common stock at $3.25 apiece. Among them are Singapore's sovereign-wealth fund and Prince Alwaleed bin Talal of Saudi Arabia. The New Jersey pension system, which bought Citigroup preferred shares in January 2008, is "still reviewing" the agreement, a spokesman said

Citigroup Inc. and the federal government agreed to a third rescue

Citigroup Inc. and the federal government agreed to a third rescue that will give U.S. taxpayers as much as 36% of the bank but expose their ownership stake to greater risk from the recession and housing crisis.
Friday's agreement shows how hard the Obama administration is trying to stabilize the U.S. banking industry without a full-fledged nationalization that would wipe out investors and leave the government in charge. But the deal will punish existing shareholders of Citigroup, who will see their stake diluted by 74%, and likely do little to change the awkward relationship between federal officials and management of the New York company.

Government officials don't see the latest agreement with Citigroup as a template for other rescues, though bank stocks fell on worries that the agreement will be cloned at other suffering U.S. financial institutions.

According to Citigroup executives, the Treasury Department and other banking regulators didn't try to squeeze new concessions from the New York bank. For example, the company wasn't pushed to make more loans, rein in foreclosures or curb executive pay beyond previously agreed or required levels, these people said.
Over the past several days, Treasury Secretary Timothy Geithner and other government officials discussed whether to require the removal of Citigroup Chief Executive Vikram Pandit, according to a person familiar with the discussions. But government officials concluded it was impractical to oust him, partly because of a lack of strong potential successors. A boardroom shake-up already is in motion, largely due to pressure from the Fed.

This rescue also was more palatable because the government isn't pumping in additional taxpayer dollars. Instead, as much as $25 billion in preferred shares held by the U.S. government will be converted into common shares as Citigroup struggles to stabilize itself following more than $37 billion in net losses during the past five quarters.

Depending on how many current holders of Citigroup preferred stock agree to a similar move, the company's tangible common equity could surge to $81.1 billion from $29.7 billion at Dec. 31. That would reverse the recent slide in tangible common equity -- a gauge of what shareholders would have left if the company were liquidated -- that fueled a downward spiral in Citigroup shares.
The conversion leaves taxpayers exposed to the risk of greater losses. The government's preferred holdings had stood ahead of common stock in Citigroup's capital structure, meaning they were less likely to lose value if the company's woes continue to mount. In addition, by converting much of the U.S. stake to common shares, Citigroup won't have to pay the hefty dividend payouts that were attached to the preferred stock.

"The government is bending over backwards to not go along the lines of nationalization," said Bernie Sussman, chief investment officer of Spectrum Asset Management, a unit of Principal Financial Group Inc. that manages about $6.9 billion in assets. "They had the alternative to completely zero out the common stock."

美國財政部將250億美元的花旗優先股轉為普通股

美國財政部願意將至多250億美元的花旗集團優先股轉換為普通股
2009年 2月 27日 21:38




美
國財政部(Treasury Department)週五宣佈﹐願意將所持花旗集團(Citigroup Inc., C)至多250億美元的優先股轉換為普通股。此舉將更好地保護股東利益免遭損失。

但是﹐美國財政部同時明確表示﹐美國政府這樣做的前提條件是花旗集團能夠吸引私人投資者也這樣做。


美國財政部週五上午在一份公告中表示﹐願意參加花旗集團優先股到普通股的轉股計劃﹐但轉股額將與私人投資者轉股額保持一比一的比例。

美國財政部還在公告中表示﹐將接受交換計劃中其他優先股股東所獲得的最優惠的條件和價格。

美國財政部還表示﹐這一交易不會增加財政部對花旗集團的投資額。

花旗集團週五也在一份公告中表示﹐根據可以轉換的最大股數計算﹐美國政府可以擁有花旗集團發行在外普通股總股數的36%左右﹔現有股東將擁有花旗集團發行在外股數的26%左右。

美國財政部還表示﹐花旗集團董事長已告知財政部﹐花旗集團將盡快對董事會進行調整﹐以後董事會的多數董事將是新的獨立董事。

【美股盤後】銀行股領跌 標普500挫至12年低點

中央社台北2009年 2月28日電）美股週五收黑，標準普爾500指數挫至12年低點，主要因政府三度紓困花旗集團 (C) 將削減現有股東持股74%，加上最新公佈的數據顯示美經濟衰退速度超乎預估，拖累美股走勢。
Federated Clover Investment Advisors基金經理人Matthew Kaufler接受彭博訪問時表示，花旗問題簡直是場噩夢，並且持續擴大，何時可終結尚不得而知。而且就發生在惡化的GDP數據公佈之日，進一步打擊市場信心。花旗收盤重挫39%，報1.50美元，改寫18年低點。美國政府三度紓困花旗，財政部表示如果民間股東也同意以相同條件轉換成為普通股，財政部將高達 250億美元的優先股轉換成為普通股。
花旗週五爆大量，成交量超過18億股，改寫美股紀錄，佔總成交量140億股約13%，超過全美國交易所 3個月日均量46%。

美國政府與花旗就擴大政府持股展開談判

美國政府與花旗就擴大政府持股展開談判

據知情人士透露﹐花旗集團(Citigroup Inc., C)正在與美國聯邦政府官員就政府大幅擴大對花旗集團的所有權一事進行談判。

儘管上述談判仍可能破裂﹐但美國政府也可能最終持有花旗集團多達40%的普通股。上述知情人士稱﹐花旗集團高管希望美國政府持股比例更接近25%。

此類舉措將使聯邦政府官員在花旗集團的影響力得以提高﹐花旗集團已將相關計劃提交監管機構。瞭解談判情況的知情人士稱﹐奧巴馬(Obama)政府並未表明是否支持上述計劃。

知情人士透露﹐根據正在考慮的方案﹐政府持有的450億美元花旗優先股中的大部分將轉換成普通股。政府之前通過注資獲取了這部分優先股﹐相當於花旗7.8%的股權。

此舉不需要動用納稅人更多的錢﹐但花旗其他股東將面臨股份被稀釋的局面。聯邦政府獲得花旗更多股權可能引發其他困境銀行也將陸續達成類似協議的猜測。



知情人士稱﹐作為方案的一部分﹐花旗管理人士希望說服購買了該行優先股的私人投資者能夠像美國政府一樣將所持優先股轉換為普通股﹐這些投資者包括新加坡政府投資公司(Government of Singapore Investment Corp., GIC)、阿布扎比投資局(Abu Dhabi Investment Authority, 簡稱ADIA)和科威特投資局(Kuwait Investment Authority)。此舉將進一步提振銀行的有形普通股權益資本(TCE)這一晦澀但越來越重要的資本衡量指標。

上述方案的細節仍可能發生變動﹐政府將優先股轉換為普通股的價格等關鍵問題尚未得到解決。

此前TCE作為衡量銀行財務情況的一項指標一直未受到太大重視。該指標還被認為是最保守的財務狀況指標之一。

銀行家和監管部門傾向於使用第一級資本來衡量一家銀行的資本充足情況。第一級資本率考慮的是股本而非普通股。以第一級資本率衡量﹐包括花旗在內的多數大銀行財務情況似乎都屬健康。花旗的一級資本率為11.8%﹐遠高於被評為資本狀況優良所需的水平。相反﹐多數銀行的TCE率顯示出情況相當糟糕。花旗截至去年12月31日的TCE率為1.5%﹐遠低於被投資者界定為安全水平的3%。

US Goverment in Citigroup

美國政府將加大對花旗集團的掌控力度正文

美國政府可能增持花旗集團(Citigroup Inc.)股份﹐此舉將使這家在困境中掙扎的金融服務業巨頭更直接聽命於政府。
目前持有花旗集團7.8%股份的美國政府已經在迫使該公司剝離部分業務﹐並對管理層的綜合薪資事宜擁有否決權。
政府近幾個月向花旗集團注資450億美元﹐還同意吸收該行資產負債表上價值數千億美元的不良資產損失。
專注於金融服務行業的紐約投資調研公司Keefe Bruyette & Woods Inc.董事長兼首席執行長John Duffy稱﹐從注資到資產保護﹐花旗集團實際上已經被國有化了。
位於弗吉尼亞州亞力山德里亞的金融服務諮詢公司Ely & Co.負責人Bert Ely表示﹐政府已經暗中掌控了花旗集團的許多方面。他認為﹐政府的這種掌控可能會變得更加明顯﹐而不是更加隱蔽。

Citigroup will restructure

花旗集团(Citigroup Inc., C)16日表示正在进行重组，把个人和企业银行业务整合成一家名为Citicorp的公司，把其他门类的客户贷款或金融服务整合成名为Citi Holdings的公司。花旗集团承认，在重组完成之后，Citi Holdings与Citicorp之间将泾渭分明。

　　花旗集团首席执行长潘伟迪(Vikram Pandit)并没有重新定义花旗集团的全能银行模式，也丝毫没有背离他本人和其他管理人员长久以来所讲的花旗集团的特色：即全球银行业务。在银行办理存款并把交易帐户与贷款挂钩的客户是花旗集团核心业务的基础。

　　花旗集团全球银行业务负责人Ned Kelly在接受道琼斯通讯社(Dow Jones Newswires)采访时表示，由非核心业务组成的 Citi Holdings有两个特点：第一，它的消费者业务超出了花旗集团所希望的水平，第二，它更倾向于一家非银行机构，换句话说，它更像是一家传统银行以外的实体。

　　花旗集团这一次把消费者金融业务和存款业务彻底分离，从而改变了近期消费者金融业务要么被其他银行收购、要么转型为一家银行的做法。但是接下来，花旗集团要想剥离消费者金融业务可就难了。潘伟迪说，他并不急于出售这部分资产。或许，他没这个能力。

　　咨询公司Booz & Co.的金融服务合伙人Seamus McMahon表示，与其他拥有消费者金融业务的银行一样，花旗集团也遇到了难题。他说，花旗集团的两大客户群之间没有任何重叠，尽管消费者金融业务的盈利能力诱人，但依然无人问津。究其根源，主要在于消费金融业务是与资本市场密切相关的，是依靠出售在二级市场发放的贷款来融资的。自从金融危机爆发后，这种融资方式就成了问题。

　　但花旗集团的Kelly坚称，证券化市场融资成本上升和融资难度加大并不是花旗决定重组的原因;对花旗来说，消费者金融业务的规模太大了，导致其难以专注核心业务。

　　Citi Holdings将由以下几个部门组成：

　　-CitiFinancial：消费者金融公司，在全美拥有3,000家以上的分支机构，提供私人贷款和汽车贷款等金融产品;按照潘伟迪的说法，这家公司与花旗集团的银行业务联系不大。

　　-CitiMortgage：主要处理经纪行、而不是花旗分支机构所经办的抵押贷款。花旗集团最近几年才开始在花旗银行(Citibank)与CitiFinancial之间建立联系，但这种试验还不成气候。

　　-Primerica：出售年金和退休基金，同时也发放消费者贷款。

　　-企业联名信用卡业务：其发放的信用卡上标记的是一家零售商的名字，而不是花旗集团。一些观察人士认为，这部分业务相对容易出售。摩根大通公司(JPMorgan Chase & Co., JPM)就可能存在收购意向。

　　以上业务合并之后的总资产将达到8,500亿美元左右，其利润将约占花旗集团总利润的20%。流动性较差的资产也将被并入Citi Holdings。受资产冲减影响，这部分业务曾给花旗带来不小的冲击。

　　潘伟迪称，Citi Holdings所囊括的这些子公司都是优质资产，在花旗集团看来它们都很有价值，这也是为什么这些业务或许应该被剥离出去，或是像美邦(Smith Barney)那样与其他公司的业务合并。

　　Mendon Capital Advisors Corp.研究部门负责人Frank J. Barkocy认为，将花旗集团一分为二是很有道理的; 就Citicorp而言，该公司可以重新专注于其熟悉的业务，这部分业务的扩张和盈利机会也都具有吸引力;至于Citi Holdings，花旗集团分拆了这部分非核心业务;在当前的经济环境下，这部分资产难以卖个好价钱，但他相信，当状况有所改善时，花旗集团会把这部分业务作价出售。

　　花旗集团首席财务长Gary Crittenden表示，对于股东而言，此次重组的好处就是战略彻底明确了;新的结构让人们清楚地了解到花旗集团的盈利和增长前景，另外也明确了Citi Holdings能给花旗带来多少收入;而且，这一切都能发生在不完全剥离业务的情况下，就像美邦交易所表现的那样。