Citigroup May Have to Lower Dividend - Analyst

Shares of Citigroup dropped Thursday on a report by CIBC that said the bank may have to cut dividends or sell assets to shore up capital. CIBC notes that Citigroup might have to raise up to $30 billion, and that it could get worse if additional credit concerns arise. "Higher credit losses and further disruption in the [structured investment vehicle] market would only exacerbate our thesis of capital pressures," the report stated. Much of Citigroup's value to investors stems from their dividend, so a decrease would severely hurt demand for the stock: "We believe the stock will be under significant pressure and could trade into the low $30s," analysts wrote. Citi's profit fell 57% last quarter, mostly due to massive write-downs from credit losses (full story). Citigroup shares fell 6.9% to $38.51; they're down almost 31% YTD.

Sources: MarketWatch, Bloomberg
Commentary: When Will Citi Get it Right? • Superfund Isn't a Bailout - NYT • Citi's Off Balance Sheet Liabilities: Spooky as a Halloween Apparition
Stocks to watch: C. Competitors: BAC, JPM, LEH. ETFs: DHS, FDL, PRFF
Earnings call transcript: Citigroup Q3 2007

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Comments

[Burns]

Amazing. What is going on over at Citigroup? At first many people wanted to blame Chuck Prince, but I think we should start asking the the Directors are ( www.newsvisual.com/new... ), and what are they doing? We have practically neither seen nor heard anything from them recently. They seem to blindly support Prince, but it is obvious that the stock and shareholder confidence is falling. They need to do their duty and do what is best for the investor.

2007 Nov 01 01:41 PM