Citigroup Inc shareholders, cheered by a US$5.1 billion first-quarter loss that wasn’t as big as some analysts forecast, face growing concern that the bank may have to sell assets, reduce the dividend and attract outside investment to bolster capital.
Citigroup’s so-called Tier 1 capital ratio — a measure of its ability to withstand loan losses — fell to 7.7 percent at the end of last month, the New York-based bank said on Saturday. Citigroup says it needs a 7.5 percent ratio to provide a margin of safety and preserve its credit ratings.
The bank’s shares surged 4.5 percent yesterday after it reported US$16 billion of asset writedowns during the quarter, less than some observers predicted. The writedowns burned through much of the US$30 billion in capital Citigroup had raised since late last year, leaving it vulnerable to further charges and loan-loss provisions.
“We’re in a recession, they have a huge consumer book and there’s huge double-digit-billion provisions that they’re going to have to take in the next 18 months to two years,” CreditSights Inc analyst David Hendler said. “They’re undercapitalized for their risk.”
A weakening US economy and rising consumer delinquencies have forced chief executive officer Vikram Pandit and chief financial officer Gary Crittenden to back away from assurances earlier this year that the bank didn’t need to raise more capital.
In January, Crittenden said Citigroup “stress-tested” its assumptions under “multiple recessionary scenarios.”
Asked on Friday if the bank might seek an additional infusion, Crittenden said: “You can never say never.”
“This is a difficult business environment,” Crittenden said in a conference call with analysts and investors. “There are no easy solutions here, no silver bullets.”
Citigroup raised capital in December and January by selling stakes to investment funds controlled by foreign governments including Abu Dhabi, South Korea and Kuwait.
The infusion helped boost Citigroup’s Tier 1 ratio to 8.8 percent by Jan. 22 from 7.1 percent at the end of the year.
The first-quarter loss was second in size in the bank’s 196-year history only to the record US$9.88 billion reported in the previous period.
It wiped out so much capital that Citigroup may have to find outside investors or cut the dividend, Hendler said.
The Eurovision Song Contest has seen a surge in punter interest at the bookmakers, becoming a major betting event, experts said ahead of last night’s giant glamfest in Basel. “Eurovision has quietly become one of the biggest betting events of the year,” said Tomi Huttunen, senior manager of the Online Computer Finland (OCS) betting and casino platform. Betting sites have long been used to gauge which way voters might be leaning ahead of the world’s biggest televised live music event. However, bookmakers highlight a huge increase in engagement in recent years — and this year in particular. “We’ve already passed 2023’s total activity and
Nvidia Corp CEO Jensen Huang (黃仁勳) today announced that his company has selected "Beitou Shilin" in Taipei for its new Taiwan office, called Nvidia Constellation, putting an end to months of speculation. Industry sources have said that the tech giant has been eyeing the Beitou Shilin Science Park as the site of its new overseas headquarters, and speculated that the new headquarters would be built on two plots of land designated as "T17" and "T18," which span 3.89 hectares in the park. "I think it's time for us to reveal one of the largest products we've ever built," Huang said near the
China yesterday announced anti-dumping duties as high as 74.9 percent on imports of polyoxymethylene (POM) copolymers, a type of engineering plastic, from Taiwan, the US, the EU and Japan. The Chinese Ministry of Commerce’s findings conclude a probe launched in May last year, shortly after the US sharply increased tariffs on Chinese electric vehicles, computer chips and other imports. POM copolymers can partially replace metals such as copper and zinc, and have various applications, including in auto parts, electronics and medical equipment, the Chinese ministry has said. In January, it said initial investigations had determined that dumping was taking place, and implemented preliminary
Intel Corp yesterday reinforced its determination to strengthen its partnerships with Taiwan’s ecosystem partners including original-electronic-manufacturing (OEM) companies such as Hon Hai Precision Industry Co (鴻海精密) and chipmaker United Microelectronics Corp (UMC, 聯電). “Tonight marks a new beginning. We renew our new partnership with Taiwan ecosystem,” Intel new chief executive officer Tan Lip-bu (陳立武) said at a dinner with representatives from the company’s local partners, celebrating the 40th anniversary of the US chip giant’s presence in Taiwan. Tan took the reins at Intel six weeks ago aiming to reform the chipmaker and revive its past glory. This is the first time Tan