Blogging from the Highlands of Scotland
'From fanaticism to barbarism is only one step' - Diderot

Sunday 23 November 2008

The Citi never sleeps - but it is having a stroke

When the world's largest bank by assets this time last year suffers the kind of declines in its share price which Citibank has experienced in the past week, then one must wonder if anyone at all is now safe in the maelstrom which is engulfing the [western] world's financial markets. Citibank has seen its market value shrink from USD192bn a year ago to less than USD19bn now. The announcement of in excess of 50,000 job cuts a few days ago really shook me when I heard about it, on top of the redundancies earlier this year; however this behemoth still employs about 300,000 even after getting rid of about 75,000 this year. Could the whole bank be sold to try and keep the show on the road? That, at any rate, is what was being being speculated in The Daily Telegraph yesterday. Absolutely extraordinary. Citibank is not just an investment bank of course, it is a major retail bank and brokerage.

Today The Sunday Telegraph has a further report of 'crisis talks' this weekend by the bank to try and secure a capital injection from a wealthy investor or the US government or those existing sovereign wealth funds which already hold stakes in the bank (from the Middle East and Asia). Although it seems to be considered unlikely that a break-up of the bank will result, predators are nevertheless circling (well, one in particular) to see if juicy parts of the portfolio can be picked up. That bank happens to be the one where I spent all my career and my recollection is that Citibank was one of the very few banking groups in the world that was regarded as a really serious rival and competitor in most markets; one can imagine that Citibank has been studied in depth for years. My own personal contacts and friendship with Citibank people date back to my earliest days as a banker and continued on and off in various locations. Suffice to say that whilst events in the financial markets over the past year and a bit and more recently those affecting the two major Scottish-based financial institutions (HBOS and RBS) have caused me deep concern, I have to confess the news that Citibank of all banks has suffered such a precipitous decline in its fortunes is just, well, stunning.

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