Citi moves closer to nationalization
February 27, 2009 by admin
Citigroup one of the worlds largest banks now has the U.S. government as a majority owner of almost 35% of the company. The bank which grew by leaps and bounds over the past ten years is losing money at a staggering pace. The bank posted a loss in excess of 10 billion dollars for the last quarter. The bank which took out large stakes in the sub prime mortgage world with their acquisition of Ameriquest mortgage a few years ago has been stung by the sharp decline in home values and rapid rise in home foreclosures. Citigroup is alos one of the worlds largest issuers of credit cards, commercial loans and made a play in the secondary derrivative market which are all showing rapid signs of deterioration. The company is struggling to maintain confidence of both its customers as well as its investors as they are forced to further write down the value of their loan portfolios while earmarking billions of dollars for future losses. Citigroup has posted losses in excess of 25 billion dollars over the past 3 quarters and has received Tarp money in excess of 45 billion to help maintain the companies tier one capital ratios. Investors in Citigroup have seen the companies share price free fall into the $1.50 range as their is growing concern moving forward that all common shareholder value could be wiped out.
