Citigroup: Too Big to Manage

As U.S. taxpayers spend massive amounts to save Citigroup (C), we are reminded yet again why that’s such a hopeless, pointless thing to do.

This time, the evidence of what a basket case Citi is comes from, J.D. Power & Associates, which on May 19 released the results of its 2009 retail banking "customer satisfaction survey." You won’t be surprised to learn that Citi came in dead last, or near dead last, in every region of the country where it has a retail banking presence. Here’s the honor roll:

• In the Mid-Atlantic region, Citi came in tied for last among 23 institutions.
• In the Midwest, Citi tied for last among 21 institutions.
• In New England, Citi tied for last among eight institutions.
• In the Southeast, Citi tied for last among 22 institutions.
• In the West, Citi tied for last among eight institutions.

It was a clean sweep of the country, of sorts. No other bank did so poorly in so many regions. The only area where Citigroup didn’t bring up the rear was in the Southwest, where Citi managed a rating of “about average.” I assume Citi’s regional manager there will be fired any day.

It takes a special sort of incompetence to be able to tick off customers from coast to coast. Yet for some reason, U.S. taxpayers—which is to say, you and me—are being forced to save a company that’s hated by both its customers and by its investors, and that has no perceptible competitive advantage. By now (and I’m being only slightly facetious when I say this) Citi’s sole purpose is to be a burden to the taxpayers.

In every financial crisis in memory, Citigroup has been the first to fall and has fallen the hardest. Multiple lavishly paid management teams later, the story’s the same—only more so. In this last cycle, not only has management failed to show any improvement, they’ve actually made things worse.

It is time to let the markets work, and put Citi out of its (and our) misery.

Comments

[LostJedi:]

You should change your title to "Citi: Too Big to Save"

Jun 03 07:08 AM

[Iknownothing:]

Could Mr. Hill be short C?

Just wondering.

Jun 03 07:27 AM

[worldtraveller:]

If C is to fall the rest of US brands to follow.
eg HSBC credit cards support the rebate of the retail gas of Shell while C credit cards support the rebate of Caltex in Asian countries.
same with the American hotels and resto ...

If C falters where will the US companies pass their money in thier outsourcing clients.Bank of China!

Make your best ideas available instead of standing commentary.

Jun 03 07:41 AM

[Mad Hedge F...:]

by a factor of ten. For me it’s déjà vu all over again. When I traded the Nikkei during the nineties, every market rally was capped by a predictable flood of new equity issuance by cash starved, undercapitalized Japanese banks. It sucked the life out of the market for a decade, confining it to a monotonous 14,000-20,000 range, until it finally dropped by half again after the dotcom bust. Sound familiar? This was while the Dow was going from 2,000 to 10,000. Now the tables are turned. Last month saw American banks soak the market with new equity on an unprecedented scale; Citibank (C) $58 billion, Bank of America (BAC) $25.9 billion, Morgan Stanley (MS) $6.8 billion, Goldman Sachs (GS) $5.8 billion, and JP Morgan (JPM) $5 billion. If the market edges higher, we will no doubt face more supply. I have no doubt that this will define the top end of a range in the Dow that we will have to live with for quite a long time. Volatilities will crash. Better to go trade China, Brazil, India, or any other country that has large cash surpluses and relatively healthy banks.

Jun 03 11:43 AM