| Citigroup suffers a huge loss and world stock markets trembles | |
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| Jan 16, 2008 01:33 |   |
 | Yesterday, Citigroup announced that they suffered a great loss of 9.83 billion dollars in the fourth quarter due to the subprime credit crisis, creating a new record in its history. Meanwhile, its shares went down by 7 percent. Influenced by this and a sharp drop of retail in December, those investors are much worried about the prospect of American financial industry and and its economy. US's stock market suffers a severe fall yesterday. The Dow Jones Index and Standard & Poor's Composite Index dropped 1.6 percent and 2 percent separately. The shares in Paris, London and Frankfurte also went down 1-2 percent. Hong Kong, Singapore, Japan, South Korea, India and Indonesia's stock markets also reduced at least 1 percent. On the other hand, US dollar was continuing to depreciate. Citigroup also declared to raise 14.5 billion dollars from foreign investors. Another US corporation Merrill Lynch is planning to raise 6.6 billion dollars too. Confronted with this situation, US might cut the interest rates to stimulate its economy. This is those investors' expectation. What do you think? Will US continue to cut the interest rates? |
| Jan 17, 2008 20:24 | #1 |
| Yes ,but that tool can only be used to a certain limit. The U. S. stock market and it's economy is for the most part being buoyed by nothing more than "hot air" and foreign investments(my opinion only). Of course this country has been in a recession for some time (it's actually a depression but our politicians will never admit it)and I fear the majority of people in the U.S. are in denial(again my opinion only). Have a good day!!!!!! |
| Jan 17, 2008 21:05 | #2 |
| heard chinese gov is selling us low rated debentures (verge of default coz of credit crunch) and switching to euro currency mkt, think it's hard for citi to raise capical in foreigh mkt to ease sub-prime crisis by means of lowering int. rt shuts the door to foreign capital although lower int. rate could stimulate investment,it's kinda trade off |
| Jan 17, 2008 22:04 | #3 |
| Don't know all the intricate details of the international transactions as you do. But the value of the dollar continues to fall against the Yuan and Euro. Canadian dollar is now +1.00 U.S(huh, what?)When the value of the $ reaches 4 Yuan we've had it. Was going to sell the 85 Dodge pu and travel China and what a fantasy that was. |
| Jan 17, 2008 22:45 | #4 |
| 1 u$ round 7.4 rmb, how much 85 dodge pu? rush a lux trip now before u$ worth 4rmb. if this ex rate appears during the next 10 yr, can u imagine the exp. chaose in cn. |
| Jan 18, 2008 12:33 | #5 |
| The value of the 85 Dodge pu would be worth enough for me to travel 1/4 across the Pacific (bad place to be) on a transcontinental airline. May have to consider southern Mexico but this is a website for China so can't go into further detail. |
| Jan 18, 2008 16:57 | #6 |
| credit cruch is more sizable than expected,as a result another wave of lay-off began along with sale of non-core assets. bad debts writedowns continues and loss cannot be stopped, heard citi board did not cut dividends in half for fear of stock price continue dropping, they are raising foreign soverign funds from rich middle east as equityf or cash injections... heard US realest has been soring out of reason, now the high house price there is just bubble... |
| Jan 18, 2008 17:20 | #7 |
| Yes I heard(read?) several days ago that Citi group has laid off 20,000 employees. Well that may not be a depression situation for the other people that continue to work but it is sure a depression to them.We in the States haven't seen the end of the housing bust yet. What is really irritating is the fact that these corporations are not being truthful with the majority of the minor stockholders as to what their financial condition really is (lack of transparency) nor are they being honest with their employees. Later |
| Jan 19, 2008 13:50 | #8 |
| bank happily loans to builders as long as they can sell the loan pushing risks to fannie mae, howerver, mass new built houses out there cannot find owners because of the salaries cannot cover the cost of owning a house, so it seems even int. payment of tillions of mtg bk bonds cannot be recovered...that they raise foreign capital and ask for fed reserve lower overnight rate is economic way , citi has other problems see quotes below: |
| Jan 19, 2008 13:51 | #9 |
| Citigroup streamlining its corporate structure Deseret News (Salt Lake City), Feb 12, 2005 by Eileen Alt Powell Associated Press NEW YORK -- Citigroup Inc., the nation's largest financial institution, on Friday announced that it was streamlining its corporate structure so the New York-based bank can be managed more efficiently. The bank said it was merging its two main bank holding units into the parent company, consolidating capital markets operations and making other moves that appear aimed at simplifying its structure and increasing accountability. Citigroup treasurer, Guy Whittaker, told analysts in a conference call the changes will improve liquidity, strengthen capital management and make the integration of acquired companies easier to accomplish. He made no reference to recent scandals in Japan and Germany that have gotten the bank in trouble with foreign regulators. Citi was forced to close its private bank in Japan last year for ethical lapses, including failure to check properly for possible money laundering operations. In Europe, Citigroup bond traders sought to boost profits by buying large amounts of futures contracts on German government bonds, driving up the price, then selling the bonds on other markets for a quick profit. Asked about the European scandal, Citi's chief financial officer, Sallie Krawcheck, said that Germany's investigation was focused on the individuals involved in the trades and that the bank was cooperating. |
| Jan 19, 2008 13:51 | #10 |
| She said that the impact on the bank's European business was difficult to quantify, adding: "There is no doubt that if you look at our numbers . . . results were not as strong as we would have hoped." Citi's chief executive officer, Charles O. Prince, forced three executives to leave the company after the Japanese scandal and reportedly has been taking disciplinary action against traders involved in the European dealings, according to published reports. Prince, who is a lawyer, has made "accountability" a theme for the bank since he took over the top operational job at the company from Sanford I. Weill in October 2003. Weill remains chairman. The changes announced Friday would appear to make many of Citigroup's subsidiaries more directly accountable to top management. The reorganization, which is subject to regulatory review, is expected to be completed in the third quarter. Also Friday, Citigroup announced it was making "limited staff reductions" in its corporate and investment banking division. An estimated 1,000 jobs are expected to be cut worldwide, according to people familiar with the decision. The division currently has about 48,000 workers. Citigroup employs some 285,000 people worldwide. The main reorganization announced Friday involves merging Citi's two bank holding companies -- entities that operate Citi's banking and credit card operations -- into the mother company, Citigroup Inc. The holding companies-- Citicorp and Citigroup Holdings -- are legacies of the merger of Citicorp and Travelers Life in 1998 that created Citigroup. Citi announced late last month that it was selling Travelers to MetLife Inc. In a second step, Citi said it was creating Citigroup Funding Inc. The subsidiary will issue commercial paper and medium-term notes, the banking company said. Other capital markets funding activities, including issuance of long-term debt, will be handled by Citigroup Inc. In a third move, Citi is tying its Citigroup Markets Holdings Inc. subsidiary, also known by the acronym CGMHI, closer to the mother company. The Global Capital Markets Group, which is the division involved in the European trading problems, is part of CGMHI. Under the restructuring, Citigroup will guarantee the public indebtedness of CGMHI. "Upon issuance of the guarantee, CGMHI will no longer file periodic reports with the Securities and Exchange Commission and will continue to be rated on the basis of a guarantee of its financial obligations from Citigroup," the statement said. Citi had more than $1.4 trillion in assets as of the end of 2004 and serves some 200 million customers in more than 100 countries. Citigroup shares rose 42 cents to close at $49.40 in Friday trading on the New York Stock Exchange. |
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