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Goldman Kicks Citiroup While It Is Down
It is just not getting any better for Citigroup. Yesterday a Goldman Sachs report not only suggested selling Citi shares, the recommended selling the shares short as part of bank stock paired trade. The Goldman analyst suggested that the bank would have to write down another $8.9 billion in assets. Tis would be on top ogf the 446 billion in losses since the credit crisis began last August. He also thinks they may have to cut the dividend again. Under this scenario Citigroup will once again have to raise capital from outside sources. So far they have had to turn to foreign Sovereign Investment funds and other large investors for $42 billion in capital.
Citigroup continues to attempt to restructure and refocus its business. There are reports that several of their Indian operations are going to be for sale shortly. Operations being discussed include its technology outsourcing operation as well its back office operations. The divisions could be worth as much as $1 billion according to some reports. Layoffs continue at the bank as well with as many as 300 jobs are expected to be cut in the sales and trading operations in the next month. These were part of the 6000 job cut announced back in April and will bring the total job loss at Citigroup to around 13,000 in 2008.
Citigroup stock is now down 65% in the past 52 weeks and trades at a 10 year low. Given the Goldman report and prediction for the second quarter, shares seem unlikely to rebound significantly any time soon.
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