Robert Rubin, Citibank: “There are no plans to cut the dividend.”

This stock is crap

 

The stock yes, for now. But not the company behind.

 

Ah I was waiting for the 1999 language to rear its idiotic head, and guess who delivers? You got our residnet guru, stocktrad3r. Dividends are crap he says. You have no idea how the market works long term. Reinvested dividends, along with stock appreciation are what makes investing worthwhile. Stocks like C, BAC, JPM, USB, and MO are the way to get rich long term. You just keep playing the momo game with your simulator account. what a putz

 

“There are no plans to cut the dividend.”

He chose his words carefully. They could make the 'plans' to cut the dividend tomorrow and he would not have lied. That in itself would keep me out of the stock, not to mention the huge volume on this down move.

 

In fact there are no plans, period.

 

CIBC: Citi’s math doesn’t add up

In the wake of Citi’s latest writedowns, CIBC - the analysts who precipitated the bank’s share slide with their dividend-cut note last week - have issued another warning: Citi’s maths doesn’t add up.

Citi insists in its statement on Sunday that after the $8-11bn Q4 writedowns it expects to realise, More…

In the wake of Citi’s latest writedowns, CIBC - the analysts who precipitated the bank’s share slide with their dividend-cut note last week - have issued another warning: Citi’s maths doesn’t add up.

Citi insists in its statement on Sunday that after the $8-11bn Q4 writedowns it expects to realise, it will not be cutting its dividend and will restore capital adequacy by the second quarter of 2008 - flatly contradicting CIBC’s October 30 predictions. CIBC issued their own note on Monday, and questioned Citi’s figures:

The math on this announcement just doesn’t add up in our opinion. After what we now expect to be a loss for 4Q and a payout of $2.7 billion of its dividend, its capital ratios should only deteriorate materially. Note, we are not even assuming further credit losses or SIV put backs in this calculation.

By our estimates, C’s payout ratio will be in excess of 90% for 2007 and roughly 60% in 2008. Assets sales intended to improve capital ratios would only lower earnings and push the payout ratio to prohibitive levels. This is the Catch 22 we referred to in a prior note, dated October 30, 2007.

We continue to expect more negative headline risk from C. We continue to believe severely low capital ratios will be the main area of focus, and that as C’s price heads towards the low 30s, pressure will be felt across all financial stocks.

We believe that for Citi to re-establish an average tangible capital ratio of over 4.25%, the bank will need to raise over $30 billion in equity. To do that, it could cut its dividend, raise capital, sell assets, or a combination thereof. In any of those scenarios, we believe the earnings and returns would diminish significantly.

An example of a national regulator implementing Basel I, but not Basel II, is in the United States. Depository institutions are subject to risk-based capital guidelines issued by the Board of Governors of the Federal Reserve System (FRB). These guidelines are used to evaluate capital adequacy based primarily on the perceived credit risk associated with balance sheet assets, as well as certain off-balance sheet exposures such as unfunded loan commitments, letters of credit, and derivatives and foreign exchange contracts. The risk-based capital guidelines are supplemented by a leverage ratio requirement. To be adequately capitalized under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 capital ratio of at least 4%, a combined Tier 1 and Tier 2 capital ratio of at least 8%, and a leverage ratio of at least 4%, and not be subject to a directive, order, or written agreement to meet and maintain specific capital levels. To be well-capitalized under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 capital ratio of at least 6%, a combined Tier 1 and Tier 2 capital ratio of at least 10%, and a leverage ratio of at least 5%, and not be subject to a directive, order, or written agreement to meet and maintain specific capital levels. These capital ratios are reported quarterly on the Call Report or Thrift Financial Report.

 

Love your username. LOL

 

Yeah, what a coincidence!

 

I put money on the table that they WILL delay (not cut) the dividend or in Wall Street lingo will implement a "capital conservation reinvestment dividend plan" aka we will temporarily delay paying out the dividend until the markets improve. Just wait and it will be double or nothing.

 

give their chance a plan to work