In a move to possibly boost its revenue, Citigroup bought the internet bank Egg from the UK insurer Prudential
for only 75 million pounds. This is 375 million pounds less than the original value, or about 40% less value than that
assigned by Prudential just a year ago. The reason for the sale, according to Prudential was growing losses for Egg.
The bank was estimated to have lost 145 million pounds last year alone. The move was considered a good one by
analysts as this was the best price on the market. According to experts, Prudential would have needed to infuse
additional capital into Egg if it would have had to fetch a better price. However, this move would not have gone well with
investors.
Posted by Shue on April 27th, 2009 :: Filed under
Citygroup
In a bid to stabilize its postion and reassure the markets, Citigroup has agreed to have the Government
restructure its board of directors to include more independent members. Last year, in a bid to cut costs, the
bank slashed over 50,000 jobs and in January, Citigroup was split into 2 separate entities. These 2
businesses would help in better management. Citicorp, one of the bodies, would continue to manage the
traditional banking work of the company while the Citi Holdings business branch would specifically handle the investment assets of the firm that are considered the riskiest. Some of the stocks owned by the Government are to be
converted to common shares.
Posted by Shue on April 26th, 2009 :: Filed under
Citygroup
The US Government now has a 36% stake in the troubled Citigroup bank up from the previous 8%, the Treasury
announced earlier in March. The higher stake comes with more responsibilities as this will mean the US
Government will have a more powerful influence over the bank. However, the day-to-day operations and control
of the bank will still be handled by the Citigroup’s board. This move will help raise the bank’s private capital
and still leave out extra taxpayer investment. Citigroup was one of the worst hit banks by the credit crunch.
The bank was bailed out in a deal worth $45 billion by the US Government. The bank’s risky loans were also
guaranteed with an extra $306 billion.
Posted by Shue on April 25th, 2009 :: Filed under
Citygroup
According to Reuters, the troubled banking unit of Citi Holdings has got a new
chairman. Gary Crittenden, former Chief Financial Officer will now work with Mike Corbat who is the
interim chief executive of Citi Holdings as they try to sell some $850 billion worth of assets under the
unit. Edward Kelly was elevated to the position of CFO to replace Gary Crittendem. Crittendem will be
responsible for disposing of Smith Barney brokerage, the Primerica insurance unit and some $300.8 billion
in troubled assets. Citi Holdings is a separate entity from Citicorp, whose assets totalling $1.1 trillion
includes the ratail and investment banking operations that Citigroup intends to keep.
Posted by Shue on March 29th, 2009 :: Filed under
Citygroup
As the fincial crisis continues to loom, british taxpayers may have to foot one extra bill of about $4 million in lost deposit following
a cancellation of a private jet order for Royal Bank of Scotland(RBS) executives. RBs was recently bailed out by the governmeent. Citigroup
has likewise had to cancel a business jet order that was considered wasteful. Dassalt Aviation, the company that had received the order
to manaufacture the jet airliners, said that it had received a cancellation of 3 orders from the former U.S. giant. RBS on the other hand
had made the order 5 years ago, long before the financial crisis could have been envisioned. The cancellation means that the bank, which is
now owned by the British government will have to forego the 10 percent deposit placed on the order.
Posted by Shue on March 28th, 2009 :: Filed under
Citygroup
Citigroup is considering conducting a reverse stock split that is part of an exchange offer
that would make the U.S. government the owner of a 36 percent stake in the bank. This is in line
with the proposed government bailout that would see its $27.5 billion of securities being converted
for common stock. The bank said that the split could take place before June 30, 2010. Citigroup is
the third largest U.S. bank and the reverse split could see its outstanding shares reduce. However,
the move will also help to boost a very low share price. It is expected that the stock exchange offer
could help increase the bank’s 5.5 billion shares to 21 billion.
Posted by Shue on March 27th, 2009 :: Filed under
Citygroup
Citigroup is offering to exchange stock for all of its depository shares that would
ensure that it boosts its measure of capital on which its investors have lately
been foucsing on. Following this move, its tangible common equity ratio(TCE), which is
regarded as the measue of a bank’s financial soundness, would likely rise from $29.1 billion
to about $81 billion. Citigroup said that private holders of preferred securities had
agreed and come to definitive agreements regarding the exchange offer. The offer is to be
launched in early april.
Posted by Shue on March 26th, 2009 :: Filed under
Citygroup