In 1978, Citigroup had first used the slogan "The Citi Never Sleeps".
After 3 decades of insomnia, it seems the time has finally come for Citi to sleep.
The chart say it all. The stock has crashed to $3.77 - a price last seen in 1993.
Citigroup has more than $2 trillion in assets (nearly twice India's GDP).
The current market value of the bank is $20 billion.
Citigroup seems to have exposure to almost all kinds of financial instruments - subprime mortgages, subprime credit cards, corporate loans etc.
In the past, the bank had moved lot of its exposure away from its balance sheet to Special Investment Vehicles (SIV's) and other investment structures.
This allowed the bank to over-leverage itself.
The bank had taken excessive risks and may have to pay a heavy price for it.
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I searched for the exact figures, but there isn't any consensus among analysts on losses in individual segments.
I am not posting any figures yet, but it is now clear that sooner or later, the bank will need a serious capital infusion or face bankruptcy.
With a $2 trillion balance sheet, the bank qualifies itself as "too big to fail".
Investors fear that as with other bailouts, a bailout of Citigroup may mean that the common shareholders will be wiped out.
Citi - Time To Sleep?
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