The Tale of Two Citis: A Bleeding Banking Behemoth Breaks Up
January 16, 2009 by Tisa Silver
Filed under Finance
And then there were two…
Citigroup (Ticker: C), which I have pet-named the “Wal-Mart of the financials,” will split into two smaller companies, Citicorp and Citi Holdings. According to the Associated Press, Citicorp will host worldwide traditional banking activity and Citi Holdings will handle the bank’s “riskier assets and tougher-to-manage ventures.”
Citigroup’s days of Tommy-esque operations have appeared to hit a road block after many speed pricey bumps:
May 2008: Citi announces plans to shed $400 billion in assets over the next two years.
June 2008: Investment bank “re-sizing” plan announced. Plan includes shedding 6,500 jobs.
August 2008: New York AG’s office announces SEC probe of Citigroup and his intent to file fraud charges against Citigroup.
October 2008: Citi tries to buy Wachovia. Thankfully, this fell through. How would they have paid for it?
November 2008: Plans announced to give 50,000+ employees the axe. Citi reaches bailout deal.
January 2009: Deal announced to merge brokerage operations with Morgan Stanley.
Today: Citi posts a fourth quarter 2008 loss of $8 billion and shares trade below $4.
The breakup is a major undertaking, but I believe it is a step in the right direction. Two Citis are better than one and this breakup should prove beneficial to Citi’s management and us hardworking taxpayers!
