Seeking Alpha

Citigroup's among 5 rejected capital return plans

  • The Fed approves 25 out of 30 capital return plans from the nation's largest lenders, but rejects those from Citigroup (C), RBS Citizens, HSBC North America, Santander Holdings (SAN), and, of course, Zions Bancorp (ZION).
  • Press release
  • Citi -3.3%, RBS -0.2%, HSBC -1.4%, Santander -1.5%, Zions -1.3% in after-hours trade.
Comments (20)
  • DeepValueLover
    , contributor
    Comments (9619) | Send Message
     
    Spectacular buying opportunity in C.

     

    Lovin' it!
    26 Mar 2014, 04:07 PM Reply Like
  • Mike Maher
    , contributor
    Comments (2724) | Send Message
     
    Its certainly interesting down here. I'm a little concerned about what to me is a total drop of the ball by management tho. How are they the only bank to not get this right?
    26 Mar 2014, 04:20 PM Reply Like
  • june1234
    , contributor
    Comments (3146) | Send Message
     
    Thats what I was thinking. With all the time they had to prepare I'm surprised 5 of them got rejected; not exactly the image any CEO wants.
    26 Mar 2014, 06:08 PM Reply Like
  • bbro
    , contributor
    Comments (10309) | Send Message
     
    Imagine if they did this back in 2005 and 2006...
    26 Mar 2014, 04:36 PM Reply Like
  • Interesting Times
    , contributor
    Comments (13056) | Send Message
     
    Who said they didn't ?
    26 Mar 2014, 04:41 PM Reply Like
  • bbro
    , contributor
    Comments (10309) | Send Message
     
    I have read these stress tests over the last 5 years....back in 2005 and 2006 I know they ran internal
    stress tests and the stress tests were childs play compared to these. These stress tests are formidable. Something not known or talked about but the stress tests on May 2009 were significant reason why the market took off
    for the rest of 2009.
    26 Mar 2014, 05:09 PM Reply Like
  • bbro
    , contributor
    Comments (10309) | Send Message
     
    In the 2009 stress test...
    "The estimated two-year cumulative losses on
    total loans under the more adverse scenario is 9.1 percent at the 19 participating BHCs; for comparison,
    this two-year rate is higher than during the historical peak loss years of the 1930s."

     

    26 Mar 2014, 05:56 PM Reply Like
  • bbro
    , contributor
    Comments (10309) | Send Message
     
    Today...

     

    "The 18 bank holding companies have increased their aggregate tier 1 common capital to $836 billion in the second quarter of 2013, the period of most recent data, from $392 billion in the first quarter of 2009. The tier 1 common ratio for these firms, which compares high-quality capital to risk-weighted assets, has more than doubled to a weighted average of 11.1 percent from 5.3 percent."

     

    The stress test for this year...

     

    Under "severely adverse" scenario this year, the U.S. would undergo a recession in which unemployment — now at 6.7 percent — would reach 11.25 percent, stocks would lose nearly half their value and home prices would plunge 25 percent.
    26 Mar 2014, 05:59 PM Reply Like
  • june1234
    , contributor
    Comments (3146) | Send Message
     
    Doubt these stress tests include the unregulated underfunded swaps market at the heart of the 08 crisis, part of the $1.4 quadrillion derivatives market or 20 times the entire worlds GDP.
    26 Mar 2014, 06:11 PM Reply Like
  • dancing duke
    , contributor
    Comments (80) | Send Message
     
    Meaningless Banco Santander US is not public and I am sure the parent does not need any dividends from it.Maybe some day when it is public.
    In the scheme of things in the Santander group the USA part is small fish
    26 Mar 2014, 04:52 PM Reply Like
  • sourdo
    , contributor
    Comments (218) | Send Message
     
    My favorite swing trade stock! After hours back in for 500 @ $47.28. I think perhaps the market over reacted here? We'll see....

     

    sourdo
    26 Mar 2014, 05:01 PM Reply Like
  • Tom Sr
    , contributor
    Comments (279) | Send Message
     
    Sourdo,
    Yeah, I'm long C and have managed to do fairly well trading options in the 47/48 to 51/53 range (covered calls and short puts)....sell the calls as it nears the high end and sell the puts against cash in my acct as it nears the "lower end". However, I hoped for some price increase over time.

     

    It absolutely boggles my mind that C could not get their request approved. As an executive you learn early in a situation so profoundly important "never ask the question unless you are dead on blanking certain of the answer". Corbat, what ere you thinking????? IF the CFO and his crew absolutely assured you of success, fire him. This was that significant IMO. Reminiscent of Pandit and his idiot 1 for 10 split AND failing his request for buyback etc
    26 Mar 2014, 05:46 PM Reply Like
  • nafar
    , contributor
    Comments (236) | Send Message
     
    Absolutely the market over reacted to the rejection news. The TBV would improve further by US$ 5 (nearly the expected EPS for 2014). The EPS seems achievable as CEO is confidant that Citi Holdings would break even in 2014. So what adds up is US$ 1.5b+ in profit. Once the CEO announces the time line for submission of revised plan, the price would jump back to atleast to its pre levels.
    26 Mar 2014, 05:54 PM Reply Like
  • bbro
    , contributor
    Comments (10309) | Send Message
     
    Tangible book value of Citibank... 55.38...
    26 Mar 2014, 06:08 PM Reply Like
  • gussieboy
    , contributor
    Comments (26) | Send Message
     
    It's hard to believe. What a management team! The gang that couldn't shoot straight. They suck with a capital S.
    26 Mar 2014, 07:07 PM Reply Like
  • gussieboy
    , contributor
    Comments (26) | Send Message
     
    I am an old retired broker with Smith Barney. This company has been snake bit ever since Robert Rubin raised his ugly head.
    26 Mar 2014, 07:12 PM Reply Like
  • mphill47
    , contributor
    Comments (574) | Send Message
     
    I think this could present a buying op however it would be prudent to wait several days and see how this plays out.
    26 Mar 2014, 07:12 PM Reply Like
  • Kleenx
    , contributor
    Comments (5) | Send Message
     
    If the company wanted to buy back 6.4 billion dollars worth of stock and cannot follow through on that but now the rest of the buyers can now collectively buy C shares down this much.
    Ok, let's go!
    26 Mar 2014, 09:38 PM Reply Like
  • cdeter
    , contributor
    Comments (19) | Send Message
     
    Last one out,turn off the lights!
    26 Mar 2014, 09:52 PM Reply Like
  • june1234
    , contributor
    Comments (3146) | Send Message
     
    Nothing new. Citi is Citi. 3 times busted in Japan for money laundering same deal going on in Mexico today. Also US bank with the most foreign retail exposure
    11 Apr 2014, 11:50 AM Reply Like
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