Citigroup (C) announced yesterday that it won't be among the banks to raise dividends this year. Both JPMorgan Chase (JPM) and Wells Fargo (WFC) were approved to distribute more capital to shareholders early this year, while Citi's plan was rejected. In a revised capital plan to be submitted on Monday, June 11, Citi has opted "not to request any additional return of capital in the 2012 re-submission."
The timing may have had something to do with the decision. With the current turmoil in global banking, Spain on the verge of requesting a bailout, persistent uncertainty with Greece, and the infamous $2 billion loss at JP Morgan, maybe Citi thought better of doing anything else that might rock the boat. And maybe that's prudent. If its capital plan were rejected again, it would certainly add to the ongoing turmoil.
Though the statement is not all gloomy. Citi touts the strength of its balance sheet:
Citi is one of the best capitalized banks in the world. As of the end of the first quarter of 2012, our Tier 1 Common ratio was 12.5% under Basel I and an estimated 7.2% under Basel III, Citi is also highly liquid, with close to $500 billion in cash and available-for-sale securities, representing approximately 26% of the balance sheet.
If Citi's boasts about its balance sheet hold true, shareholders may not have to wait too much longer to receive a meaningful dividend. Although no decision has been made yet, Citi will submit its 2013 capital plan in January.
The Press Release can be found here.