Shares of Citigroup fell 5.9 percent to US$32 yesterday, the lowest in four years, after Goldman Sachs Group Inc downgraded the stock to "sell" from "neutral" on Monday, predicting the bank could write off up to US$15 billion in soured investments, including mortgage losses, in coming months.
The US' second-largest bank by market worth, Citigroup is already reeling from its exposure to the US housing downturn and tighter credit markets.
The banking behemoth is searching for a new chief executive officer after former CEO Charles Prince stepped down on Nov. 5 as Citigroup revealed it was facing likely investment writeoffs of between US$8 billion and US$11 billion.
Analysts at Goldman Sachs believed the company could be forced to absorb bigger writeoffs.
"We currently assume Citigroup will take an US$11 billion writeoff in the fourth quarter of 2007, at the high end of the firm's guidance, and we also assume an additional US$4 billion writeoff in the first quarter of 2008," the Goldman analysts said in a report.
They said the bank "will likely face an increasingly challenging operating environment which is likely to pressure results in many of their businesses."
Citigroup made US$2.4 billion in net profit during the third quarter, but its profits slowed dramatically amid pre-tax losses of US$1.56 billion and other losses and writedowns totaling almost US$2 billion.
New York-based Citigroup said earlier this month that further writeoffs would likely act as a drag on its fourth-quarter earnings.
The Goldman analysts have trimmed their earnings forecast for Citigroup next year to US$3.80 per share compared with a prior assumption of US$4.65.
The Goldman analysts said they "do not expect a `quick fix' to some of Citi's issues," adding that "the lack of leadership at this point in Citi's storied history could not have come at a worse time."
Deutsche Bank AG on Monday also cut its price target for Citigroup by 15 percent to US$29. Deutsche Bank has a "sell" recommendation on the shares.
NO-LIMITS PARTNERSHIP: ‘The bottom line’ is that if the US were to have a conflict with China or Russia it would likely open up a second front with the other, a US senator said Beijing and Moscow could cooperate in a conflict over Taiwan, the top US intelligence chief told the US Senate this week. “We see China and Russia, for the first time, exercising together in relation to Taiwan and recognizing that this is a place where China definitely wants Russia to be working with them, and we see no reason why they wouldn’t,” US Director of National Intelligence Avril Haines told a US Senate Committee on Armed Services hearing on Thursday. US Senator Mike Rounds asked Haines about such a potential scenario. He also asked US Defense Intelligence Agency Director Lieutenant General Jeffrey Kruse
INSPIRING: Taiwan has been a model in the Asia-Pacific region with its democratic transition, free and fair elections and open society, the vice president-elect said Taiwan can play a leadership role in the Asia-Pacific region, vice president-elect Hsiao Bi-khim (蕭美琴) told a forum in Taipei yesterday, highlighting the nation’s resilience in the face of geopolitical challenges. “Not only can Taiwan help, but Taiwan can lead ... not only can Taiwan play a leadership role, but Taiwan’s leadership is important to the world,” Hsiao told the annual forum hosted by the Center for Asia-Pacific Resilience and Innovation think tank. Hsiao thanked Taiwan’s international friends for their long-term support, citing the example of US President Joe Biden last month signing into law a bill to provide aid to Taiwan,
China’s intrusive and territorial claims in the Indo-Pacific region are “illegal, coercive, aggressive and deceptive,” new US Indo-Pacific Commander Admiral Samuel Paparo said on Friday, adding that he would continue working with allies and partners to keep the area free and open. Paparo made the remarks at a change-of-command ceremony at Joint Base Pearl Harbor-Hickam in Hawaii, where he took over the command from Admiral John Aquilino. “Our world faces a complex problem set in the troubling actions of the People’s Republic of China [PRC] and its rapid buildup of forces. We must be ready to answer the PRC’s increasingly intrusive and
STATE OF THE NATION: The legislature should invite the president to deliver an address every year, the TPP said, adding that Lai should also have to answer legislators’ questions The Chinese Nationalist Party (KMT) yesterday proposed inviting president-elect William Lai (賴清德) to make a historic first state of the nation address at the legislature following his inauguration on May 20. Lai is expected to face many domestic and international challenges, and should clarify his intended policies with the public’s representatives, KMT caucus secretary-general Hung Meng-kai (洪孟楷) said when making the proposal at a meeting of the legislature’s Procedure Committee. The committee voted to add the item to the agenda for Friday, along with another similar proposal put forward by the Taiwan People’s Party (TPP). The invitation is in line with Article 15-2