It sure seems that’s the way the market is betting:
Citigroup shares closed down $1.96 at $6.40 on the New York Stock Exchange and have fallen 33 percent this week as some investors concluded that Chief Executive Vikram Pandit’s plan to shed 52,000 jobs and cut expenses by one-fifth won’t restore the bank to health.
“People are looking at their business model and wondering how on earth they’re going to be able to survive,” said William Larkin, a fixed-income manager at Cabot Money management in Salem, Massachusetts. […]
While shares of the New York-based bank are down 78 percent this year, trading Wednesday brought new urgency as investors viewed the bank’s prospects in terms of other companies that either failed or went to the brink.
Worries about Citigroup were a key factor in U.S. stocks falling broadly Wednesday to a 5-1/2-year low.
“The whole thing echoes quite frankly of Bear Stearns,” said David Dietze, chief investment officer of Point View Financial Services in Summit, New Jersey. […]
Wednesday’s decline drove Citigroup’s market value down to about $34.9 billion, allowing U.S. Bancorp to surpass it as the nation’s fourth-largest bank by market value. U.S. Bancorp’s asset base is about one-eighth as large.
Citigroup’s market value is down from more than $270 billion just two years ago. It is also less than one-half the $75 billion of new capital that Citigroup has raised since the credit crisis began, including $25 billion through Treasury Secretary Henry Paulson’s financial industry rescue package.
Somehow I don’t think that Citi’s CEO imagined shareholders would want him to be one of the 52,000 employees getting their pink slips, do you? But that sort of thing happens when you lose 235 BILLION DOLLARS in 2 years, my friends. Still, I bet he has a tidy nest egg already put aside for rainy days such as this:
Call him Citigroup’s quarter-billion-dollar man.
That is how much Vikram Pandit was paid for taking over as chief executive of the embattled bank. Pandit received about $165.2 million in connection with the sale of Old Lane Partners, the investment firm Citigroup bought last April for as much as $800 million to lure him to the company. He received an additional $2.7 million in the roughly six months he served as head of Citigroup’s investment bank and alternative investments group.
As the song says, “Oh! What a lucky man, he was.”