Citigroup's market cap dropped a massive $9bn in New York trading Wednesday, as the shares closed 22% down to $6.45. The stock is now trading at a 13-year low.
Investors are clearly unnerved, and doubts remain that CEO Vikram Pandit is the man to get the firm out of its current crisis. And, as The New York Post reports, there are growing concerns that Citi's latest 50,000 plus job cull will not be enough 'to beat back the impact of rising losses from credit cards, auto loans and mortgages'.
Pandit will not have been helped by Fox-Pitt Kelton analyst David Trone, who came out Wednesday and suggested that the firm will likely take $3bn in net writedowns in the fourth-quarter. He also said in a note to clients: 'The key question is whether management will be able to continue to find buyers for business units, which is necessary to fortify the capital base against further credit losses and writedowns'.
In the meantime, Bloomberg reports that Citi confirmed Wednesday that it has agreed to acquire $17.4bn in assets held by structured investment vehicles advised by the company.
Citi is not, however, the only major bank suffering on the stock front. Goldman shares fell 11% Wednesday, closing at 9 year lows, while shares in Bank of America and JPMorgan Chase hit multi-year lows. The New York Posts quotes UBS chief market strategist David Bianco, who said: 'We're witnessing the worst market crash in most people's lifetimes. People seem to be enjoy telling each other how bad its going to get and working themselves into a frenzy. It's just becoming silly'.
Reuters reports, however, that Friedman Billings Ramsey analyst Paul Miller has said that he estimates that the US financial system still needs at least $1 trillion of tangible common equity to restore confidence and liquidity.
And finally some good news. The Times reports that staff over at Rothschilds are likely to receive 'record' bonuses this year. Although we are taking that with a pinch of salt, at least it seems there will be bonuses over there. Any bonus, of course, looks like being a bonus this year.
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