Wow, that would really add to the already ugly cuts. The stock price of the once-significant Citi has fallen below $5 and now the vultures are circling above. It seemed like only yesterday Citi was asking the Fed to extend the honor of lending them billions to buy Wachovia Bank and then suing Wells Fargo because - gasp! - they had the cash and did not need federal money for the loan. Charles Prince must be happy he was pushed out the door with tens of millions after raking in hundreds of millions based on deals that were later written down for billions.
Senior officials at Citigroup told CNBC that they will have to make a strategic change in the firm's direction, including finding a possible merger partner or raising cash in the coming days to arrest a sharp slide in the firm's stock price.If Citi's "efforts to slash costs" are anything like Big Auto's attempts, I think we see where this is all going. How many corporate jets are they flying around the world?
A Citigroup spokesman had no comment, but investment banking sources say possible partners could include Morgan Stanley, Goldman Sachs or State Street Bank. Both Goldman and Morgan have recently switched over to banking holding companies so they could collect deposits. But finding a possible partner would be difficult in an environment where every major firm is reeling from the credit crunch and has its own set of problems.
Citigroup's stock plunged below $5 a share on Thursday for the first time in 13 years as investors questioned the banks ability to handle potential credit losses and writedowns in 2009. By falling below $5, many mutual funds and institutional investors -- in particular pension funds -- must unload shares of Citigroup to comply with investment guidelines.
The bank also has been reeling on concerns that mounting losses from credit cards, mortgages and toxic debt could overwhelm its efforts to slash costs and add deposits.
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