Citigroup is the next victim in this global crisis. This is the conclusion after the share decreased with more than 20 percent. Despite the top management did some efforts to save the bank but the shareholders weren’t convinced so the share decreased.
On Friday morning their was an extraordinary meeting for the managers to discuss the problems because when we look to the figures we can see that the share of Citigroup decreased this week with 60 percent.
The share hit a low of 3.05 dollars Friday but when the new president of the United States proclaimed that Timothy Geithner would be his nominee for Treasury Secretary the share decreased.
The media proclaimed Thursday that the management is concerned about selling parts of the bank or maybe the whole bank. The management wants to focus on the strategy.
Friday was also a bad day for the employers, the management said that they want to fire 50,000 workers. After losing 25 percent of its value Wednesday, Citigroup stock fell down with 26% on Thursday to $4.71, its lowest level in more than a decade, and now they are dropped under the 4 dollars. This is a crisis for the bank.
There is a lot of pressure on Citigroup now, shortsellers thought the share would drop down so there are a lot of people that are speculating. Also institutional investors are not allowed to have shares under the 5 dollars, so it’s difficult to come out of this negative circle.
There are a lot of solutions said analysts and professionals.
One rumor is that they could break up parts of their organization and sell it to other companies.
But this is denied by the management in a conference call.
Another solution is a possible tie-up with a peer but that would be the end of Citigroup.
The question we have to ask is who has the potential to organize and run an organization in this difficult times and in this negative circle.
This is an evolution in the financial crisis. Citigroup was influenced by the news of Lehman Brothers and Bear Stearns. The only way to put Citigroup in bad papers is when loan losses were so overwhelming that it barred off cash flow. So they need to keep the rest.
I think it is really necessary to protect Citigroup to go bankrupt. They are very important, they operate in a lot of countries so they really need to be protected, otherwise a lot of customers will get in trouble. I don’t know how, maybe the government can save them when they are in bad papers but I don’t know because the government can’t give money all the time to financial institutions.
We really need rest on the markets now, and especially on the financial markets. The financial shares are on a bad point and it’s difficult to come out of this negative light but when their would be rest again on the markets, the shares of the financial institutions will increase again.
So first we have to create rest and confidence in the markets, than can we work on the saving plans and see what the consequences are.
Source: http://money.cnn.com/2008/11/21/news/companies/citigroup/index.htm?cnn=yes
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I share the same opinion. Citigroup is an important player on the markets. If the company would go bankrupt, it would be a disaster.
That's why there has to be found a solution. Maybe the government can indeed provide financial assistance.
But, I agree when Wouter says that the government can't always help. If they help every company, they will get into trouble themself.
Although, while saying this, we have to ask ourselves: is this fair? Some companies receive help and others don't.
As I have already said before, the markets and economy really need confidence, otherwise it will be hard to recover.
I think the same like Wouter and Tim. It could be very negative for our economy if City bank would go bankrupt. in my opinion the government should help city bank because they helped other banks to. It would not be fair for households and shareholders of City group when the government didn't take any action. on the other hand you should ask yourself the question "should the government help the car sector also or not"
Citygroup is a very important company in the financial market, and the money of the people should be protected but I don't believe that the governments will be able to keep up. The automotive industries are also in trouble, and a lot of people have invested in this sector as well, but the governments can't keep giving money, or they will, like Tim already said, get into trouble themself.
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