John_S

Is Your Money Safe at Citibank?

My quick math says at this stock price their Tier 1 capital ratio would be below 6% without the $25 billion dollar injection from the US Treasury.

Citibank is in real trouble from what I can see.

Look at how many other Bank CEOs bought stock before their bank failed or was forced into a merger. Smells like a PR gimmick. I wonder if Citi loaned Pandit money to make the acquisition.

Citibank is too big to fail for the US government. They ill have to bail them out and wipe out equity holders or force an acquisition by a more stable bank. BoA, JP Morgan and Wells Fargo all have picked up some very weak companies through acquisitions. This weight on their balance sheets and the desire not to let one bank get too large will prevent those three from acquiring Citi.

It seems like US Bank (USB) is the only one with the balance sheet (Thanks in part to TARP.) and the management to be able to acquire Citi. Citi has so many problems I am not sure they would be willing to acquire it with government backing.

As the market's drop another 20% here in the near future, Citibank may well "outperform" and drop another 50%. In my opinion, this bank is at risk today. With another 30% or 40% reduction in Tier 1 capital, they would be on life support.