Sachs and the Citi

With Citigroup (C) apparently up for sale either in part or whole, rumors were swirling Friday morning regarding which entity(s) would be likely suitors. The one which might make the most sense is Goldman Sachs (GS), not the least reason being that the new bank could be named “Sachs And The Citi.”

Rumors regarding a merger/takeover/sale of Citigroup are helping European shares rebound and providing a boost to U.S. futures as well, which as of 05:30 EST were up about 4.5%. The rumors have also helped cause a shift in the currency market back to risk-acceptance mode, as the euro, pound and Australian dollar move higher against the dollar as the yen is sold.

According the WSJ, Citi’s record 26% one-day plunge has officials of the firm believing “they need to reckon with a range of scenarios that were unthinkable only weeks ago.”

“The situation should not be taken Citigroup's board and management are backing down from their insistence that the New York company has ample capital,” according to the article. A board meeting was scheduled for Friday to discuss Citi’s options.

A Citigroup spokeswoman said in a statement Thursday evening: "Citi has a very strong capital and liquidity position" and is "focused on executing our strategy," which includes cutting expenses and selling assets. "We believe the benefits will be seen over time."

Conspiracy theorists will no doubt be making a connection here with former Goldman head and present Treasury Secretary Hank Paulson’s decision last week to not use TARP funds to buy troubled assets from banks as originally intended. Citi has billions of dollars worth of these battered securities on its books.

However, Citigroup has been far from the only bank which has seen its shares plunge since the change in Treasury’s tactics. J.P. Morgan Chase (JPM) shares slid 18% on Thursday, while Bank of America fell 14%.

Another option for Citi, according the WSJ,

could be a sale of one or more of its parts, such as its Smith Barney retail brokerage, the global credit-card division or the transaction-services unit, which is one of Citigroup's most lucrative and fast-growing businesses.

Early Thursday, Saudi Arabian investor Prince Alwaleed bin Talal bin Abdulaziz Al Saud that he would be increasing his holdings in Citigroup to 5%, adding that he remained a strong supporter of its management.

"Prince Alwaleed began buying Citi shares as he strongly believes that they are dramatically undervalued," according to an emailed statement from his office. His holdings are currently less than 4%, according to the statement.

Comments

[BamBam:]

It's Goldman that is desperate for the assets of Citigroup, not the other way around. Unfortunately, Goldman and its crooked friends at Treasury and the SEC are trying to drive Citigroup into the arms of Goldman at a discount price.

2008 Nov 23 10:30 AM

[User 304775:]

a marriage made in hell


On Nov 23 10:30 AM BamBam wrote:

> It's Goldman that is desperate for the assets of Citigroup, not the
> other way around. Unfortunately, Goldman and its crooked friends
> at Treasury and the SEC are trying to drive Citigroup into the arms
> of Goldman at a discount price.

2008 Nov 23 10:50 AM

[mik123:]

Citigroup is only in this predicament because of Paulsons decision last week to abandon the whole purpose of TARP - to purchase troubled assets. When he made the announcement, he said some of the same original banks will now need additional injections. What is he waiting for. Citigroup, Bankamerica,JP Morgan, lost up to half their value with Citigroup being the worst. If you eliminate short selling, Citigroup would rally. What's happening is you have a huge amount of short selling and at the same time their buying cedit default swaps. Watch what happens to the stock if the SEC re-instates a ban on short selling on financials. Christopher Cox of the SEC has a conference call Monday regarging this. Citigroups financials are actually better than Bankamerica and JP Morgan since both purchased companies with very bad financials. These are the three largest financials in the United States. Once Citigroup gets through 2009, it will get back to earning 25 billion per year. You don't panic because profiteers are trying to destroy the stock so they can make a quick buck. Nothing has changed with Citigroups financials in the past month when the President of the United States, Fed chairman Bernacke, FDIC chairwoman Sheila Bair, Treasury secretary Paulson all agreed that Citigroup would takeover Wachovia.Go to the FDIC's website and read the Sept. 29th press release. They were obviously healthy enough then. Citigroups financials will begin to improve quickly with gas prices cut in half. Eighty percent of the country lives paycheck to paycheck. With your average couple paying $50 less per week in gas, that's $2,600 extra for mortgage and credit cards that wasn't there in August when it was still $4 a gallon. Consumers only had this price break for the past 8 weeks. If the price of gas stays down, that's huge for themdicament because of Paulsons decision last week to abandon the whole purpose of TARP - to purchase troubled assets. When he made the announcement, he said some of the same original banks will now need additional injections. What is he waiting for. Citigroup, Bankamerica,JP Morgan, lost up to half their value with Citigroup being the worst. If you eliminate short selling, Citigroup would rally. What's happening is you have a huge amount of short selling and at the same time their buying cedit default swaps. Watch what happens to the stock if the SEC re-instates a ban on short selling on financials. Christopher Cox of the SEC has a conference call Monday regarging this. Citigroups financials are actually better than Bankamerica and JP Morgan since both purchased companies with very bad financials. These are the three largest financials in the United States. Once Citigroup gets through 2009, it will get back to earning 25 billion per year. You don't panic because profiteers are trying to destroy the stock so they can make a quick buck. Nothing has changed with Citigroups financials in the past month when the President of the United States, Fed chairman Bernacke, FDIC chairwoman Sheila Bair, Treasury secretary Paulson all agreed that Citigroup would takeover Wachovia.Go to the FDIC's website and read the Sept. 29th press release. They were obviously healthy enough then. Citigroups financials will begin to improve quickly with gas prices cut in half. Eighty percent of the country lives paycheck to paycheck. With your average couple paying $50 less per week in gas, that's $2,600 extra for mortgage and credit cards that wasn't there in August when it was still $4 a gallon. Consumers only had this price break for the past 8 weeks. If the price of gas stays down, that's huge for them

2008 Nov 23 11:11 AM

[Sherry:]

Hello! In a report released by the Treasury Department at the end of October the TARP recipients listed and payments made thus far (in billions) are: Citigroup, JP Morgan Chase, and Wells Fargo, $25 each; Bank of America, $15; Merrill Lynch, Morgan Stanley and Goldman Sachs $10 each; Bank of New York Mellon, $3; State Street of Boston, $2.

Why isn't anyone asking what Citi did with the money?????


On Nov 23 11:11 AM mik123 wrote:

>
>
>
>
>
> Citigroup is only in this predicament because of Paulsons decision
> last week to abandon the whole purpose of TARP - to purchase troubled
> assets. When he made the announcement, he said some of the same original
> banks will now need additional injections. What is he waiting for.
> Citigroup, Bankamerica,JP Morgan, lost up to half their value with
> Citigroup being the worst. If you eliminate short selling, Citigroup
> would rally. What's happening is you have a huge amount of short
> selling and at the same time their buying cedit default swaps. Watch
> what happens to the stock if the SEC re-instates a ban on short selling
> on financials. Christopher Cox of the SEC has a conference call Monday
> regarging this. Citigroups financials are actually better than Bankamerica
> and JP Morgan since both purchased companies with very bad financials.
> These are the three largest financials in the United States. Once
> Citigroup gets through 2009, it will get back to earning 25 billion
> per year. You don't panic because profiteers are trying to destroy
> the stock so they can make a quick buck. Nothing has changed with
> Citigroups financials in the past month when the President of the
> United States, Fed chairman Bernacke, FDIC chairwoman Sheila Bair,
> Treasury secretary Paulson all agreed that Citigroup would takeover
> Wachovia.Go to the FDIC's website and read the Sept. 29th press release.
> They were obviously healthy enough then. Citigroups financials will
> begin to improve quickly with gas prices cut in half. Eighty percent
> of the country lives paycheck to paycheck. With your average couple
> paying $50 less per week in gas, that's $2,600 extra for mortgage
> and credit cards that wasn't there in August when it was still $4
> a gallon. Consumers only had this price break for the past 8 weeks.
> If the price of gas stays down, that's huge for themdicament because
> of Paulsons decision last week to abandon the whole purpose of TARP
> - to purchase troubled assets. When he made the announcement, he
> said some of the same original banks will now need additional injections.
> What is he waiting for. Citigroup, Bankamerica,JP Morgan, lost up
> to half their value with Citigroup being the worst. If you eliminate
> short selling, Citigroup would rally. What's happening is you have
> a huge amount of short selling and at the same time their buying
> cedit default swaps. Watch what happens to the stock if the SEC re-instates
> a ban on short selling on financials. Christopher Cox of the SEC
> has a conference call Monday regarging this. Citigroups financials
> are actually better than Bankamerica and JP Morgan since both purchased
> companies with very bad financials. These are the three largest financials
> in the United States. Once Citigroup gets through 2009, it will get
> back to earning 25 billion per year. You don't panic because profiteers
> are trying to destroy the stock so they can make a quick buck. Nothing
> has changed with Citigroups financials in the past month when the
> President of the United States, Fed chairman Bernacke, FDIC chairwoman
> Sheila Bair, Treasury secretary Paulson all agreed that Citigroup
> would takeover Wachovia.Go to the FDIC's website and read the Sept.
> 29th press release. They were obviously healthy enough then. Citigroups
> financials will begin to improve quickly with gas prices cut in half.
> Eighty percent of the country lives paycheck to paycheck. With your
> average couple paying $50 less per week in gas, that's $2,600 extra
> for mortgage and credit cards that wasn't there in August when it
> was still $4 a gallon. Consumers only had this price break for the
> past 8 weeks. If the price of gas stays down, that's huge for them

2008 Nov 23 01:25 PM

[God's Child:]

I thought the story was that Citi was taking the bail out funds to finance acquisitions. The rumour mills will never stop churning out stories until Citi comes clean on their bad assets.

2008 Nov 24 09:05 AM