Stock Quote
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Oops, They Did It Again
Citigroup this morning priced a $4.5 billion offering of common stock. This follows earlier offerings thi s year of preferred and common stock, bringing the total to over $10 billion so far in 2008. The bank needs the capital to keep its capital ratios above the minimum as it recovers form the staggering losses it has taken since the start of the current credit crunch. The shares were priced at a 4% discount to the previous closing price on the NYSE. The offering was originally said to be for $3 billion. Announcing the increase, Gary Crittenden, the CFO of the bank said "We were pleased to increase the offering size to $4.5 billion in response to strong demand from a broad base of investors. This optimizes our capital structure and further strengthens our balance sheet." Oppenheimer and company analyst Meredith Whitney, who has been dead on accurate with her coverage of the stock so far, said it was not enough. She estimates that Citigroup will need to raise $10 to $15 billion just to offset the damages form losses in mortgage and leveraged loans. She also noted continued earnings pressure and the fact that many of the banks core business lines remain weak.
In other news, Citigroup also announced that it intends to open a retail brokerage and financial services operation in South Korea by 2009. The unit would be separate form its wholesale Korean brokerage operations. Announcing the move Ha Yung-Ku, head of Citibank's Korea said "We would like to specialize the new brokerage company into personal asset management or wealth management services, which would have a minimized risk and would not require a heavy capital." The license is expected to be approved ahead of the Korean governments finalizing the 2009 Capital Markets Integration act which ids expected to allow brokerages to take a more prominent role in shaping the nations financial marketplace. For Citigroup it is the latest move to diversify away form the troubled domestic markets in the United States.
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