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It has been over a month since the 1Q financial reports and Citigroup Inc (C) has been active changing multiple facets of the company. The biggest change in the last month has been the value of the stock price, which has climbed from the mid-$40s, to over $51 per share. Although the whole market has increased, Citigroup has seen a 10%+ growth that will level out for the rest of the year.

Citigroup Inc.'s CEO, Mike Corbat, took over January 13, and has set a quiet, but aggressive tone for the company. He plans to move faster on reducing Citi Holdings, but gain a fair market value during the sell-off. Citi Holdings has been a drag on the bottom line in every quarterly report since 2008. He is instilling cost-cutting measures and gaining efficiencies within the core-programs. And with the purchase of Best Buy's (BBY) card portfolio from Capital One (COF), he has tipped his hand about how he plans to strengthen the company.

Rumor has it that Citigroup may be the lead buyer if General Electric (GE) puts GE Capital's $31 billion dollar private card portfolio up for sale. GE may try to create an IPO for a larger payday, but Citigroup may create an offer hard to pass. It could be a positive step for both if the price is right. The upside for Citigroup would be a strengthening of its core business that would create increased income into the future. And the downside would cost the company any buffer it has to meet the Basel III requirements for January 14. Citigroup may have to forgo its stock repurchase plan this year if it makes this purchase and since the stock price has climbed to over $50 per share.

On May 16, 2013, Citi Holdings announced the sale of its Brazil-based consumer finance unit, Credicard, to Banco Itaú Unibanco. The sale is expected to give Citigroup $1.37 billion in cash, but two bigger pluses are driving the deal. Citigroup is expected to profit $300 million in after-tax profit, and Citigroup will retain the corporate cards offerings by Credicard and transfer them to its current credit card business it maintains in Brazil. This will further reduce Citi Holdings' portfolio and may support the release of additional cash reserves for Citigroup.

The current business models of all major banks are unsustainable in the current economic structure the Feds have created forcing the rate of money to extreme lows. This will continue for the near term, however, the Fed Chief Ben Bernanke has hinted toward a reduction in the purchase of bonds if the economy continues to improve. None of the major banks, the markets nor investors reacted to these comments and they are attempting to prepare for changes in the market. If the economy continues to improve we could see a reduction in the amount purchased from $85 billion in bonds per month, to $70-75 billion per month by this fall. This would shake the markets initially with uncertainty and interest rates may move up slightly, but a limited reduction and a well-announced move like that is not expected to rock the markets. The financial institutions may look forward to increasing the yield on loans to increase their profitability.

The current state is a negative effect limiting profitability for banks driven by the Fed's current policy. Business loans have surged to $1.55 trillion this year, a 10 percent increase over 2012. Big banks have chosen to increase commercial and industrial loans and could be adding significant risk to the balance sheet for banks. The big banks are attempting to increase income by providing more loans to more borrowers. Business loans are viewed as more risky investments. Some economists see this as a positive move to help get the country moving toward recovery, however, regulators issued new guidelines on May 21, in an attempt to tighten restrictions and mitigate the risks.

Another small event that may evolve into a banking game changer is that Google (GOOG) has entered the financial services industry with Google Wallet in its Gmail online services. Users of Gmail will be able to sign up for Google Wallet and deposit cash into the account. They will be able to transfer funds to another person with a Google Wallet without using a bank transfer. Google is planning to provide the service free in the beginning and that would circumvent the credit card or debt card fees for both users. If retailers begin using it they could bypass the fees also that are passed to the consumers.

Source: Citigroup's Aggressive Posture To Increase Business Operations