Treasury could reap 40% profit in sale of some Citigroup stock
Good to see the government unload their shares back to the private sector. They did not really involve themselves much in management or compensation issues other than the general TARP mandate so this will take the overhang off the stock. Citigroup is the posterboy for the “Too Big to Fail” Koolaid that everyone was drinking for the last 24 months.
This has got to stop and if any large bank commits such bad mistakes then they need to pay the ultimate price like any other company. Until we understand that no matter what the cost, the long term cost will always be greater if we let bad companies stay in business and keep good companies prosper the lessening of competition as well as preventing new entrants from entering the field because of the embedded players.
This is at the very core of our problems in this country, we shun the dynamism that failure brings to our economy. We want to support existing companies even when it does not make a business case for having them around. This only helps our foreign competitors. If we are using our resources to support failing companies then we are not letting those resources go to where the future jobs will be generate along with natural growth.
USA Today – The Treasury Department said Monday that its first sales of Citigroup stock (C) will cover up to 1.5 billion shares.
That would amount to about 20% of the 7.7 billion shares of Citigroup common stock the government owns.
It received the shares as compensation for the financial support it extended to the bank during the height of the financial crisis.
In a statement Monday, Treasury said it plans to proceed with the sales of the Citigroup common stock “in an orderly fashion under a pre-arranged trading plan with Morgan Stanley, Treasury’s sales agent.” Treasury did not disclose in its brief announcement exactly when the stock sales would begin or how long the sales would last.
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Abu Dhabi fund seeks Citigroup deal scrapped or pay up $4 billion in damages
I think many were wondering when this was going to be addressed. If you remembered back when this deal was made was when we still had investment banks and people thought this crisis was just a mild recession and all these banks were buys and were temporarily impaired because of these pesky real estate decline. Abu Dhabi paid a handsome sum at the time to come help Citigroup out when they were in a pinch and since that investment or speculation depending on how you look at this, were burned pretty bad with Citi’s shares trading at $3.78 per share.
My thinking is that Citi will rework the terms of the deal to make sure that credit-line is their for them in the future if they need it in the future. It will be interesting to see how this turns out and I have been thinking about this for over a year now, glad to see its in the media and getting some traction.
Citigroup Inc said on Tuesday the Abu Dhabi Investment Authority filed an arbitration claim against it, accusing the U.S. lender of misrepresentation over a $7.5 billion investment by the sovereign wealth fund. The sovereign wealth fund, considered by some the largest in the world, bought securities from the U.S. bank in 2007. In the original deal, the Citigroup bonds must be converted into common stock at a price between $31.83 and $37.24 a share between March 2010 and September 2011.
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Citigroup to repay $20 billion of bailout funds
Well its a race to from under the “Pay Czar” and now Citibank is running as well so they can pay bonuses as well. I guess the bonus race is on these days. My question is if the government will be removing its $300 billion in guarantees for Citigroup loans and securities? If that is not withdrawn then is it clear that they are not from under the TARP program and they should still be under those pay constraints.
It is already bad enough that the U.S. taxpayers has bailed out and provided a backstop for our banking institution but now we are not seeing any real “thanks” for that gesture and more focus on getting clear of the rules that were setup so they can get paid before Christmas. Don’t be too dis-trot, this is greed working its magic, we setup the rules and they are following them so next time if we are satisfied with them, then we need to write better rules and that starts with people intelligently engaging their representatives so your voice and opinion is heard and taken seriously.
Education is the key in complex matters like finance and economics and that means you need to take some of your leisure time and dedicate it to learning about these matters if you want a different outcome than what we have gotten this far. That is a main reason I write this blog is to educate and force myself to be current by reading news on these subjects everyday.
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Citigroup Shifts Financial Advisers to Fees From Commissions
Wall Street Journal, New York - Monday took a step toward defining how it wants to serve Main Street. The bank announced it is changing the way its financial advisers operate; those 600 advisers who work within Citibank branches, and who remained when the bank combined its Smith Barney brokerage with Morgan Stanley’s brokerage in a joint venture.
Citi decided to rid itself of commission-based advice and will charge clients a fee of about 1% of invested assets. It will give clients who want wealth management services through Citibank branches the option of working with Citi’s own financial advisers, or of choosing independent advisers with whom Citi will begin to form relationships, and who will pay Citi a fee for the referral.
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Citigroup Considers Shrinking Banking Branch Network In U.S. & Canada
It is surprising after Citigroup’s bid for Wachovia’s banking business, they are now looking to shrink their retail banking operation. Usually, this is the “bread & butter” for any banks profits, using customer deposits to make new loans against. With everyone calling for more loans to help create growth in the worst recession since The Great Depression. This move seems counter-intuitive but I am not on the inside so there may be other facts that are leading management to this possible decision. We will have to see how this pans out during Citigroup organizes itself.
Bloomberg, New York - Citigroup Inc. may sell or shut some of its 1,001 branches in the U.S. and Canada as the bank shrinks following last year’s $45 billion federal bailout, a person familiar with the matter said.
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Citigroup shares may be not worthless?
Well this may be correct, with the amount of losses Citi has written-off and the “assistance” Uncle Sam has extended to them, yes the shares may be have some real value. I still don’t agree with the bailout and the socializing the losses but it is done now so we have take a look at their value. Even Jim Cramer called it when it was at $3.75 per share that it was a “buy”. he laid out a case for the purchase of the shares and it pains me to agree with his assessment. They still have massive derivative exposure so if somehow those are triggered then they would be in serious trouble, unless we bailed them out again. Could happen, seriously.
DISCLOSURE: I am not a financial advisor and this article or any articles in this website should not be taken as a recommendation to purchase this or any other securities. Please talk to a registered financial advisor before making any investment decisions.
Reuters, New York - Citigroup Inc is slowly regaining favor among institutional investors, a development that could help the U.S. government unload its 34 percent stake in the still-troubled bank. A series of bailouts has put taxpayers on the hook for tens of billions of dollars of potential losses, but left Citigroup with some of the strongest capital ratios in banking.
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Citigroup sells three credit card portfolios valued at $1.3 billion
Reuters, New York - Citigroup Inc. said on Monday it sold three credit card portfolios representing $1.3 billion in managed assets, as part of a plan to unload weak businesses and troubled assets that caused huge losses.
The third largest U.S. bank by assets, which did not disclosed the terms of the deals, said it will continue to service the portfolios through the first half of 2010.
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