Word: banking
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...value of its loans continues to fall, it may not have to take a hit to its equity. And as long as most of Citi's borrowers keep paying, as most are, Citi will be just fine. That's why most analysts see the possibility of the bank going bankrupt as out of the question...
...slightly larger than Citigroup's. And at $53 a share, investors don't seem to be too worried about Goldman going under, yet. So Goldman could use its shares to finance an acquisition. What's more, Goldman might like to get its hands on Citi's $780 billion in bank deposits and 200 million customers. Goldman recently converted to a bank holding company and plans to start attracting bank deposits on its own. But opening up branches is costly. Buying Citi, even with its troubled assets, could be cheaper way for Goldman to expand...
...Another possible suitor could be US Bancorp. The Minneapolis bank is one of the nation's largest, but it has little presence on the East Coast, where Citi is big player. U.S. Bancorp has a market cap of $40 billion, about double the size of Citigroup. What's more, U.S. Bancorp chief financial officer Andrew Cecere recently told the Wall Street Journal said that the firm was interested in making a large acquisition...
...Citi's debts. That would entail no initial outlay of funds. And with many analysts saying that Citi's books are fundamentally sound, this could be the way to go. With a guarantee Citi would not be forced to sell its assets at a discount, if any of the bank's creditors or trading partners want their money back. That would save Citi from having to write down its assets, which is what would wipe out its equity and send it into bankruptcy. Of course, if the bank does fail, the government could be on the hook for hundreds...
...firm. Paulson only has $60 billion left of the initial $350 in TARP funds that he can spent without having to face a review from Congress. More importantly, the government does not want to end up owning Citigroup. Then taxpayers would be on the hook for all of the bank's debt. So the most the government could invest in Citigroup would be $20 billion, which is the amount equal to what is held by current shareholders. If Citigroup were to issue shares to the government greater than its current value, taxpayers would be left with a more than...