Stock Quote
To add an specific blogger's feed, simply go to their blog and click on their individual RSS link.
What Next for Citgroup?
What now for Citigroup? The pressure to split up the banks and spin off some of the units to focus on the core banking business is growing. CEO Vikram Panidt is resisting the calls to spin off units the like Smith Barney brokerage unit. He is said to be planning to spin off the smaller Primerica Financial Services unit but remains determined to keep most of the bank together. He is expected to put forth his plans for the banking and investment giant this Friday at an important meeting with analysts and investors.
As he is preparing for the meeting, the bank made a move this week that has to be somewhat embarrassing for Mr. Pandit. He became a part of Citigroup when the bank paid $00 million to purchase his Old lane hedge fund operation. In the sale he personally received about $165 million. Citigroup recently announced that it is taking a write-down of over $200 million related to the fund and said it was going to have restructure the hedge fund. According to the bank virtually all of Old Lanes original outside investors have withdrawn their money after the fund experienced large losses in the latter half of 2007. The losses are a result of the credit market turmoil.
So far this year the bank has reported losses of almost $15 billion. Mr Pandit did not oversee the lending and investing practices that created these losses but inherited the problems when he ascended to the CEO position last December. Since then, the ban has had to rise almost $25 billion in capital to support its balance sheet and offset the growing losses from mortgage backed securities and highly leveraged loan transactions. Mr Pandit has also moved aggressively to cut costs, laying off employees and changing spending practices at the bank. He changed the bank's operating structure along geographic rather than product lines and slashed the dividend. He has repeatedly said that he thinks the bank needs to be streamlined, not split up into several pieces.
Friday we will get an additional look at his plans for the future and more importantly how investors view his plans for the future.
Tags:
Post a comment