Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Citigroup Selling Assets to Repay TARP

Companies / Credit Crisis Bailouts Dec 14, 2009 - 04:24 AM GMT

By: Mike_Shedlock

Companies

Best Financial Markets Analysis ArticleCitigroup, the last of the major banks still stuck in TARP is looking is looking for an exit strategy. Supposedly a deal is near. Bloomberg is reporting Citigroup Said to Near Agreement on TARP Repayment.


Citigroup Inc. is nearing an accord with the Treasury Department and regulators that would let the bank repay its $20 billion of bailout funds and escape government pay limits, people familiar with the matter said.

Under the plan, which may be announced as soon as today, the U.S. bank would raise about $20 billion of capital, said three people briefed on the plan, who declined to be identified because the talks are private. A partial offering of the Treasury’s 7.7 billion shares may be coordinated with New York- based Citigroup’s effort to raise capital, the people said.

Citigroup also plans an early termination of guarantees from the Treasury, Federal Deposit Insurance Corp. and the Federal Reserve on $301 billion of the bank’s riskiest securities, mortgages, auto loans, commercial real estate and other assets, the people said.

JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, all based in New York, repaid bailout funds in June. San Francisco-based Wells Fargo & Co., with $25 billion of TARP money, isn’t subject to pay limits because it never needed a second helping of bailout funds.

The sooner Citigroup discards its $300 billion in loan guarantees, the easier taxpayers can breathe. The question is, what can Citigroup sell to raise $20 billion? Whatever it is, shareholder dilution will come into play, either directly by a stock offering or indirectly by Citi selling off another asset.

In 2007 I said Citigroup would never survive in one piece.

It didn't.

  • Citi sold Diner's Club International to Discover in April 2008
  • Citi sold Salomon Smith Barney brokerage to Morgan Stanley in September 2009
  • Citi sold Phibro commodities-trading unit to Occidental Petroleum in October 2009
  • Citi sold its Nikko Asset Management to Sumitomo Trust in October 2009
  • Citi sold Diner's Club North America to BMO in November 2009
  • Citi sold Bellsystem24, a Japanese call center operation to Bain Capital in November 2009

On November 5 Citigroup files for IPO of Primerica unit, its life insurance division.

To raise $20 billion inquiring minds are asking what's next?

Candidate List

CitiCard
CitiMortgage
Retail Branches

I said long ago that Citigroup would eventually need to get rid of its credit card operations. The only problem is I can't figure out who is big enough to swallow that. Certainly no bank is sound enough.

Whatever it sells, Citigroup will have gone full circle.
Citibank to Citigroup to Citibank.
The Citi Never Sleeps

Citi's share price has gone full circle as well, from under $5 in 1993 to $51 in 2007 to under $5 in 2009. Citi Executives made countless millions in stock options and salary, running up leverage and ultimately running the company into the ground.

By the way, it was a comment of former Citigroup CEO Chuck Prince on July 10, 2007 that led me to make a market top call: Quotes of the Day / Top Call

Selected Snips:

Chuck Prince - Citigroup CEO: “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing".

Mish: If ever there was market arrogance, the statements by Chuck Prince says it all. It's tough calling a top but I am going to try. I suggest the current trend is exhausted. My last "top call" was specially in regards to housing in the summer of 2005. Can lightning strike twice?

Citigroup hit its yearly high in May of 2007, the S&P 500 peaked in October a few percent above the July high.

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

© 2009 Mike Shedlock, All Rights Reserved

Mike Shedlock Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in