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Citigroup board could consider selling off units as stock plunges
Citigroup Inc's board met Thursday to discuss the bank's options after chief executive officer Vikram Pandit's efforts to rebuild investor confidence failed to halt the stock's descent to a 15-year low, a person with knowledge of the matter said.
- Bloomberg
- Published: 23:30 November 21, 2008
New York: Citigroup Inc's board met Thursday to discuss the bank's options after chief executive officer Vikram Pandit's efforts to rebuild investor confidence failed to halt the stock's descent to a 15-year low, a person with knowledge of the matter said.
The board, led by Chairman Win Bischoff and independent director Rich-ard Parsons, met at Citigroup's headquarters in New York, said the person, who declined to be identified because the deliberations are private. The panel may choose to sell pieces of the bank or the entire company, the Wall Street Journal reported, citing unidentified people familiar with the situation.
The New York Times reported that management isn't actively considering a sale or split-up of the bank.
Decline
Citigroup, once the biggest US bank, with a stock market value of $274 billion (around Dh1 trillion) at the end of 2006, dropped Thursday to about $26 billion, slipping to the fifth spot after Minneapolis-based US Bancorp. A plan Pandit announced a week ago to cut costs by shedding 52,000 jobs and an endorsement by Saudi investor Prince Al Waleed Bin Talal didn't assuage shareholders' concern that bad loans and securities writedowns may extend a yearlong run of losses totalling $20 billion.
"Investors right now aren't convinced that we're done seeing dead bodies on the Citigroup balance sheet," said William Fitzpatrick, an equity analyst at Optique Capital Management in Milwaukee, which oversees about $1 billion and doesn't own Citigroup shares. "That's what the selloff is - concern over more and more losses over the next couple of quarters."
Market rout
Citigroup spokeswoman Christina Pretto declined to comment on the board meeting. She reiterated a statement by the company a week ago that it has "a very strong capital and liquidity position and a unique global franchise". Citigroup was up 92 cents at $5.63 in German trading Thursday.
Including a $25 billion capital injection from the US Treasury under the $700 billion Troubled Asset Relief Programme, the company has at least $50 billion of capital in excess of the amount required by regulators to qualify as "well-capitalised". Capital is the cushion banks must keep to absorb losses and protect depositors.
The company's shares fell 26 per cent in New York trading on Thursday, closing below $5 for the first time since 1994.
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