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...issue with Citi is the degree to which the downtrend in its stock price affects fundamental factors, as seen with other financial firms over the past few months," Mayo wrote in the report...
...Most analysts believe Citigroup can survive its current market woes, though probably not without some changes. In a report out on Friday, Deutsche Bank analyst Mike Mayo, who has been a long-time bear on Citi, says the company has adequate capital to survive. When you factor in the $25 billion Citi got from the Treasury's Troubled Asset Relief Program, Mayo estimates the bank has as much as $100 billion in cash cushion...
...Citi's lending business has actually performed relatively well in this environment. In the third quarter, the company said it had $5 billion in loans on which customers were no longer making payments. In all, Citigroup has set aside $24 billion for loan loss reserves. For most firms, that's a lot of IOUs to go bad. But for Citi it's peanuts. In fact, $24 billion is just under 3.5% of Citi's overall loan book of $718 billion. And that's not a bad charge-off rate during a time when sub-prime mortgage loans are defaulting...
...stock price. One option would be to boot chief executive Vikram Pandit. Some on Wall Street believe Pandit has not been quick enough to react to the problems of the firm and could still be in denial. On Friday, Pandit told top executives that he doesn't believe Citi needs to sell off parts of its business to raise capital. Investors don't seem to agree. The stock fell on the news...
...Rubin has been at Citigroup for a number of years, and it's not clear he has been helpful so far in stopping the losses. What's more, with a Democrat headed back to the White House his eye may be on Pennsylvania Ave. and not Park Ave., where Citi's executive offices are located...