Citigroup - Citibank In
Trouble: Will you loose your
deposits
The government is working hard on Sunday to rescue
Citigroup before Wall Street opens on Monday as worries about its
financial health had hammered its stocks.
The Treasury Department and the Federal Reserve has
been discussing strategies to help struggling Citigroup to stabilize
as shares declined to 60 percent of their value in the past
week.
Citigroup is a huge player in financial market and its
failure would cripple markets all around the world. The company has
operations stretching to more than 100 countries.
Missed opportunity came for Citigroup when it failed
to purchase Wachovia Corp., as it would give them needed U.S
deposits. Instead Well Fargo & Co. purchased Wachovia Corp.
Citigroup was hit hard by meltdown in risky mortgages
as foreclosures spiked, leaving Citi wracking up a huge losses. The
company has failed to turn profit during the past four quarters.
Fed is in talks that could buy out $100 billion in bad
assets, if the plan goes through, however; Citigroup may not receive
$100 billion at all. It will depend on the final valuation on those
assets.
Government has indicated that they are not going to
take over Citigroup like they did with AIG, by lending money to AIG
in return of 80% equity in the company.
Smaller injection of $10 - $20 billion is in talks to
help Citigroup, but this may not restore confidence in Citigroup
when Wall Street opens.
The survival of Citigroup is a national concern as its
operation stretch to almost every financial sector.
Any merger that Citigroup would enter with big players
such as Morgan Stanley or Goldman Sachs would lead to massive
layoffs that would create more problems.
There aren't many banks with strong deposits that
could buy Citigroup.
The company has already received a $25 billion from
the Treasury Department and more financing is needed to keep
Citigroup in business.
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