Citigroup facing further big write-downs By James Quinn Last Updated: 1:10am GMT 23/02/2008 http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/02/23/cnciti123.xml Citigroup is facing further financial write-downs after revealing it has an exposure of $4bn (£2.03bn) to the troubled bond insurance sector and has been forced to move a $10bn hedge fund on to its balance sheet after significant losses. The banking conglomerate also warned that further deterioration in the US housing market could lead to further write-downs in its sub-prime and leveraged loan books. The warnings come after the bank suffered its worst quarter in its 196-year history, recording a loss of $9.83bn after accounting for $22.2bn in write-downs and other provisions. Citigroup, which has already bolstered its balance sheet by $22bn in the last three months, may now have to raise further funds from external investors. The bank's quarterly 10-K report, which was filed after the market closed in New York, reveals that on February 20, Citigroup entered into a $500m credit facility with its Falcon Multi-Strategy fixed income funds. As a result of becoming its primary beneficiary, Citigroup was required to place the hedge funds assets on to its books, adding $10bn of assets and liabilities. The news is likely to trigger a further sell-off in Citigroup's shares, which have slumped by 50pc in nine months, in spite of closing up seven cents at $25.12 last night.
i agree,citi is in real trouble. keep in mind,they have lots of exposure to credit cards which is the next shoe to drop.
I'm salivating over the oppty to buy citibank in the teens for my 401k once it gets there. Will complement my commodities nicely.
Don't they have a litigation coming up in April to do with their involvement in the Enron shinanegan?
i wouldnt touch c until the overall market condition improves for financials in general. If you are looking to value invest in cheap financials for long term, why not look at much better alternatives like bac, wb, leh etc..
Thanks for your thoughts, but that's precisely why I am looking to buy C! While I am no bank analyst, I doubt that BAC or WB are really better choices - BAC buying out CFC makes it a better choice? C is too big to fail. Even if it gets split up, the parts will be worth more than the whole. The question here is not whether you should buy C. Its WHERE you buy it. (like most things) I like 18-19, if I could see it & average down. Reasonable risk/reward for what it is.
Since pro bond traders are not worried... It's hard to take the ET peanut gallery seriously: Bond Yields C - 7.1% BAC - 6.8% ING - 7.1% LEH - 6.9% MER - 7.1% MS - 7.1% ABN - 6.8% DB - 6.9% USB - 6.8% Zero risk of default in the above group. For comparison some other yields: GE - 5.9% GM - 10.7 %
I am unsure that a company that I believe just agreed to pay 11% to gain quick liquidity is a 'zero risk'. By your numbers the pro bond traders are pricing the C bonds at over a 15% higher yield than GE From what I am hearing in the Banking industry the credit card mess that may (or may not) happen could be fun like subprime.