Sanford Weill built Citigroup into one of the world's largest banking companies. Now, Vikram Pandit is watching Weill's creation wither in the stock market.
Reflecting a punishing year-long decline, Citigroup's stock price plummeted on Tuesday to its lowest level since 1998, when Weill formed the financial conglomerate through the merger of Travelers and Citicorp.
The shares sank US$0.99, or 4.3 percent, to US$22.10, as concern spread that new multibillion-dollar losses might force Citigroup to go hat in hand to foreign investors once again. The market tumble left Citigroup shares down 56 percent in the last year, the worst showing among the 30 stocks that make up the Dow Jones industrials.
For now, executives say they are confident that the company is financially strong. On Tuesday evening, Pandit told employees on an internal conference call that Citigroup was "well capitalized," a person close to the company said.
The bank has no plans to seek funds from outside investors, another person close to the company said. Since November, Citigroup has raised about US$30 billion from investors in Asia and the Middle East, as well as from the public.
But those investments may not be enough to shore up Citigroup, some investors fear.
Sameer al-Ansari, head of Dubai International Capital, a government-controlled investment fund, told Reuters on Tuesday Citigroup might need "a lot more money."
Adding to the gloom, two new analyst reports on Tuesday forecast that Citigroup would remain mired in red ink this quarter. Merrill Lynch predicted that Citigroup would take US$15 billion in write-downs because of bad mortgage investments, leaving it with a net loss of US$1.66 a share. Goldman Sachs estimated Citi's loss at US$1 a share.
Since becoming chief executive in December, Pandit, 51, has rejiggered Citigroup's sprawling structure but has not made the radical overhaul that many investors called for. On Monday, for example, he announced a reorganization of the company's wealth management business.
But investors and analysts say Pandit needs to take far bolder steps to turn around the bank, which has been pummeled by the turmoil in the credit markets. Some have urged him to break up the company, saying Citigroup has become too unwieldy to be managed effectively. Pandit, like his predecessor, Charles Prince III, has resisted that step.
Citigroup's capital levels came under scrutiny in October when Meredith Whitney, now a banking analyst at Oppenheimer, issued a scathing report saying the company's weakening finances would force it to cut its dividend, sell assets and issue new stock. At the time, Citigroup executives brushed off those ideas. By the end of last year, they were heeding Whitney's advice.
On Tuesday, the person close to Citigroup said the company was strong enough to maintain its dividend, which costs the company about US$6 billion annually. Still, that leaves open the possibility that the board may elect to cut the dividend.
Citigroup says it has more than enough capital to meet regulatory guidelines and its own internal benchmarks. The bank is in the process of raising several billion dollars by selling assets from several smaller fringe businesses and has pulled back from some domestic and international markets. It will also free up several billion dollars as the number of loans on its books shrink.
NEXT GENERATION: The four plants in the Central Taiwan Science Park, designated Fab 25, would consist of four 1.4-nanometer wafer manufacturing plants, TSMC said Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) plans to begin construction of four new plants later this year, with the aim to officially launch production of 2-nanometer semiconductor wafers by late 2028, Central Taiwan Science Park Bureau director-general Hsu Maw-shin (許茂新) said. Hsu made the announcement at an event on Friday evening celebrating the Central Taiwan Science Park’s 22nd anniversary. The second phase of the park’s expansion would commence with the initial construction of water detention ponds and other structures aimed at soil and water conservation, Hsu said. TSMC has officially leased the land, with the Central Taiwan Science Park having handed over the
The Philippines is working behind the scenes to enhance its defensive cooperation with Taiwan, the Washington Post said in a report published on Monday. “It would be hiding from the obvious to say that Taiwan’s security will not affect us,” Philippine Secretary of National Defense Gilbert Teodoro Jr told the paper in an interview on Thursday last week. Although there has been no formal change to the Philippines’ diplomatic stance on recognizing Taiwan, Manila is increasingly concerned about Chinese encroachment in the South China Sea, the report said. The number of Chinese vessels in the seas around the Philippines, as well as Chinese
AUKUS: The Australian Ambassador to the US said his country is working with the Pentagon and he is confident that submarine issues will be resolved Australian Ambassador to the US Kevin Rudd on Friday said that if Taiwan were to fall to China’s occupation, it would unleash China’s military capacities and capabilities more broadly. He also said his country is working with the Pentagon on the US Department of Defense’s review of the AUKUS submarine project and is confident that all issues raised will be resolved. Rudd, who served as Australian prime minister from 2007 to 2010 and for three months in 2013, made the remarks at the Aspen Security Forum in Colorado and stressed the longstanding US-Australia alliance and his close relationship with the US Undersecretary
‘WORLD WAR III’: Republican Representative Marjorie Taylor Greene said the aid would inflame tensions, but her amendment was rejected 421 votes against six The US House of Representatives on Friday passed the Department of Defense Appropriations Act for fiscal 2026, which includes US$500 million for Taiwan. The bill, which totals US$831.5 billion in discretionary spending, passed in a 221-209 vote. According to the bill, the funds for Taiwan would be administered by the US Defense Security Cooperation Agency and would remain available through Sept. 30, 2027, for the Taiwan Security Cooperation Initiative. The legislation authorizes the US Secretary of Defense, with the agreement of the US Secretary of State, to use the funds to assist Taiwan in procuring defense articles and services, and military training. Republican Representative
RSS