Citigroup is facing the pressure of thin

[vuittonjvj]

Citi Faces Pressure To Slim Down
The government rescue of Citigroup Inc. Reversed the perilous slide of the company's stock, but pressure is mounting on its executives and directors to do even more to stabilize the financial giant.
Citigroup's shares jumped 58% after federal officials announced an agreement late Sunday night to pour $ 20 billion of capital into Citigroup and absorb as much as $ 249 billion in potential losses on real-estate loans and securities held by the bank.
Citigroup executives acknowledged Monday that the government made it clear in weekend negotiations that it expects the company to continue to reduce its appetite for risk, and to seriously weigh more drastic actions, including possibly breaking up the company.
Gary Crittenden, chief financial officer, said in an interview that Citigroup has no 'preconceptions' about its vast array of businesses.' The constituent parts could change, 'he said.' We're looking all the time to see if there are different possible combinations, either buy or sell, that make sense for the organization. '
Mr. Crittenden declined to comment on the scenarios being examined. Executives and directors have discussed potential mergers with other financial institutions or selling major business lines, people familiar with the situation said.
' This is a reprieve, but it's not a complete pardon, 'said another person familiar with the matter, referring to the government rescue plan.' Nobody's confused about that. '
The government did not push for the ouster of Citigroup's chief executive, Vikram Pandit, as part of the agreement, as it did with the CEO of American International Group Inc. when it bailed out that company. Still, as federal officials debated the structure of the plan, there was some disagreement on whether Mr. Pandit was at fault for the company's problems, according to people familiar with the situation. One name that Wall Street executives have mentioned as a possible replacement is American Express Co. Chief Executive Kenneth Chenault.
Spokespeople for Citigroup and American Express declined to comment.
News of the rescue pushed stocks sharply higher, with the Dow Jones Industrial Average climbing 396.97 points, or 4.9%, to 8443.39. That close was the highest since Nov. 14. Still, the Dow is down 40% from its all- time high in October 2007.
People involved in the frenzied bailout negotiations said in interviews that Citigroup executives realized by the middle of last week that the plunge in the company's shares - they fell 60% last week - posed a major threat to the company's viability.
Mr. Pandit now finds himself under intense pressure to take major steps to stabilize the company. He faces a board of directors, clients and shareholders who remain nervous about Citigroup's stability, and government regulators who seem prepared to keep the company on a tight leash.
Since becoming CEO last December, Mr. Pandit has embraced Citigroup's existing structure, resisting calls to dismantle the sprawling global enterprise. Mr. Crittenden said on Monday that the company's' fundamental strategy basically stays the same, but we're open-minded. '
The company faces swelling losses on loans that aren't covered under the government's loss-sharing agreement, which amounts to insurance on a $ 306 billion pool of assets. Under the plan, Citigroup will shoulder the first $ 29 billion in losses on that pool. After that, three government agencies will absorb 90% of any remaining losses, which amounts to $ 249 billion.
The arrangement covers Citigroup's portfolios of US residential and commercial mortgages and its leveraged corporate loans, among other assets. The assets aren't just risky ones; the government insisted that the agreement cover entire asset classes, so that Citigroup couldn't simply dump toxic loans and securities in the lap of taxpayers.
Absent from the arrangement are Citigroup's giant credit-card business, where defaults have been rapidly piling up, and its overseas lending operations, which also are showing signs of stress.
While the government deal bolsters Citigroup's capital ratios, 'we are concerned that losses may eventually exceed the government's backstop, 'said Standard & Poor's equity analyst Stuart Plesser.
In exchange for covering hundreds of billions of dollars in potential losses, Citigroup is issuing the government a total of $ 27 billion in preferred shares, in which the government will receive regular dividends. The government now holds a 7.8% stake in Citigroup, which entitles it to $ 3.4 billion a year in dividends.
Last Wednesday, Citigroup executives began discussing the idea of seeking a show of support from the government if the stock price kept declining. By the end of the week, a small number of clients, including wealthy customers of Citigroup's private bank, had started defecting. Executives and government officials worried about a potential exodus.
Confidence 'began to shake, 'said a person with direct knowledge of the situation.' It was a complete death spiral and we had to stop it. '
Bank officials contemplated what they might do to pave the way for federal assistance, such as agreeing to steps to avoid foreclosing on delinquent mortgage customers.
On Friday, Citigroup Vice Chairman Lewis Kaden and investment banker Edward Kelly spoke by phone with New York Fed President Timothy Geithner to discuss the worsening situation. Mr. Geithner, President-elect Obama's nominee for Treasury secretary, encouraged the Citigroup executives to come up with ideas for how the government could help stabilize the company.
Inside the government it was far from clear that action was needed. Citigroup's stock price was tumbling, but there was no sense the company was in danger of failing. But over the weekend, as they pored through Citigroup's books, it became clear to top officials that the company needed government help.
Citigroup pushed for a deal similar to its unsuccessful agreement to buy Wachovia Corp . with financial backing from the US government. In that deal, which unraveled when Wells Fargo & Co. emerged with a higher bid, the government had agreed to protect Citigroup from losses above a certain level on more than $ 300 billion worth of assets.
On Saturday morning, Citigroup executives sent a blueprint based on the Wachovia structure to government officials.
Policymakers balked, thinking the plan too beneficial to Citigroup. If the US were to take another equity stake, Treasury Secretary Henry Paulson wanted it to be small, since otherwise the government would end up owning Citigroup. The officials worried that appearing to nationalize the company would further roil markets. They agreed that $ 20 billion was the limit for what they would invest.
The policymakers also discussed whether Mr. Pandit should remain CEO, say people familiar with the talks, and agreed that removing him would send a bad signal to the markets and potentially destabilize the company.
Later that night, the government informed Citigroup that it was comfortable with a limited cash infusion and a loss-sharing agreement modeled on the Wachovia deal.
Not everyone was satisfied. FDIC Chairman Sheila Bair harbored reservations about a bailout because it exposure her agency to big losses. She wanted government officials to consider an arrangement that would be more punitive to Citigroup shareholders. An FDIC spokesman said 'limiting the potential exposure of the deposit-insurance fund is always a high priority for Chairman Bair.'
On Sunday morning, the disagreement ignited a heated debate between Ms. Bair and her counterparts at other agencies, say people familiar with the discussions.
As the day dragged on, Citigroup executives grew frustrated that they were being kept in the dark by the government.
Around 6 pm on Sunday, Mr . Paulson called Ms. Bair to talk to her privately. He told her helping Citigroup was important and that if she couldn't play a meaningful role, the Fed and Treasury could do it without her.
Ms. Bair agreed to be involved but would only accept the FDIC taking $ 10 billion of the losses, with the Fed guaranteeing most of the rest.
Two hours later, enough of the details were worked out that Mr. Pandit briefed Citigroup's board on the plans. The directors approved it with little debate shortly before 9 pm Around 11 pm, Mr. Pandit signed the agreement.
David Enrich / Deborah Solomon
the U.S. government to Citigroup (Citigroup Inc.) helping hand, the company was re- rebound in the share price crashed frustration. Nevertheless, the requirements of its management and board of directors to take more action to stabilize the situation the company is becoming more and more pressure.
the U.S. government announced an agreement Sunday night to Citigroup injected 20 billion U.S. dollars, and for real estate loans and securities held by the Company of up to 2,490 billion dollars in potential losses to provide security. Citigroup shares jumped 58% answered.
Citigroup executives on Monday acknowledged that the negotiations over the weekend, the Government has clearly expressed the hope that Citigroup will continue to reduce their risk preferences, and seriously consider taking the class, such as spin-off company of the big move.

Vikram Pandit Citigroup chief financial officer, Gary? Crittenden (Gary Crittenden), said in an interview that the company has not yet formed its big business types to adjust the \He said the components are subject to change. Companies are looking for every moment whether there are different, the organization viable merger makes sense, whether the acquisition or sale of a business.
Crittenden declined to comment on the situation being assessed. Informed sources said the company executives and board members discussed a merger or sale of other financial institutions, major business possible.
Another person familiar with the Government's rescue plan for, said it is only a suspended sentence You are not allowed to view links. Register or Login, not a complete salvation. We all understand this.
the Government did not request the agreement in Citigroup CEO Pandit (Vikram Pandit) to step down You are not allowed to view links. Register or Login, which is with the government in rescuing American International Group (American International Group) chief executive when it requests different. However, according to informed sources, said federal officials to discuss plans in the structure of arrangements for Mr. Pandit on the issue in the United States there are different views on whether the fault. Wall Street mentioned as a possible candidate to succeed Mr Pandit is the American Express (American Express Co.) Chief Executive Kenneth? Money Nath (Kenneth Chenault).
Citigroup and American Express spokesman declined comment.
the news about Citigroup bailout push U.S. stocks rose sharply, the Dow Jones Industrial Average rose 4.9% to 8,443.39 points since November 14 is the high point, but lower than in October 2007 reached a record high still 40% decline.
involved in the rescue plan are intense negotiations, said in an interview, who to the last Wednesday after Citigroup began to realize that company's share price plunge posed a serious threat to their survival. Only last week, Citigroup shares fell to Liu Cheng.
Pandit is now feeling the pressure: he must take major steps to stabilize the company's status quo. His face was still apprehensive on the future of the company board of directors, customers and shareholders, there seems to be ready to tighten control of its government regulators.

Bloomberg News / Landov
pedestrians through the door of a branch of Citibank in New York since last December as chief executive of Citigroup has been supporting Pandit Citigroup's existing structure, refusing to large global institutions the voice of divide and rule. Crittenden said on Monday that the company's fundamental strategy is basically intact, but our attitude is open.
the hands of those not covered by Citigroup sharing agreement in the government loan, the loss in the rapid expansion. Under the agreement, the government will Citigroup 3,060 billion in assets to provide security. Citigroup will assume the first place among the 29.0 billion dollar losses, after losses by the Government to take 90% (total 2,490 billion U.S. dollars).
agreement covers the United States in the U.S. housing and commercial loans and other items of corporate leveraged loan assets. This does not just high-risk assets; the Government insisted that an agreement covering all asset classes, this way, the United States can not just bad loans and securities assets will pick out the buck to taxpayers.
agreement does not include the United States and overseas large lending business credit card business, Citigroup's credit card overdraft arrears situation is rapidly deteriorating, foreign loans have ominous sign.
deal with the government despite the increased Citigroup's capital adequacy ratio, but the S & P (Standard & Poor's) equity analyst Prairie Searle (Stuart Plesser), we worry about the ultimate loss will exceed the scope of government assistance.
to several hundred billion dollars in exchange for the protection of potential losses, Citigroup issued to the Government a total of 27 billion U.S. dollars of preferred stock, the government will get a fixed dividend. Currently, the U.S. government holds a 7.8% stake in Citigroup, will receive 3.4 billion a year in dividends.
last Wednesday, Citigroup executives began to explore if the stock price continued to fall, from the government seek support for the idea. Last weekend, a small number of customers, including Citigroup Private Bank's richest clients have begun to flee. Citigroup executives and government officials on the possible large-scale loss of customers worried.
understand the specific situation of a source, confidence began to waver. This is a death trap, we must stop it.
bank managers to consider what steps could be taken to pave the way for federal funding, as agreed to take measures to avoid defaulting mortgage customers to implement foreclosure.
on Friday, Citigroup Vice Chairman Lewis? Cardin (Lewis Kaden) and investment banker Edward? Kelly (Edward Kelly) and the New York Federal Reserve Bank President Timothy Geithner (Timothy Geithner) on the phone to discuss deteriorating situation. Geithner encouraged to Citigroup executives on how the Government can stabilize the company's recommendations. President-elect Obama has Timinggaina next government as finance minister.
within the Government, on the need for action is far from forming a clear view. While Citigroup's stock plummeted, but did not see that companies have the risk of failure. However, during the weekend, with the financial situation of their depth study of United States, senior officials began to realize that the company needs help from the government. with the proposed acquisition of Citigroup
Wachovia Corp. when the Government provides financial support for similar agreements. The agreement had finally ended in failure, because then Wells Fargo (Fargo & Co.) Wachovia out of the higher bid. In that agreement the government in the consent, if the United States more than 3,000 billion in assets exceeds the damage caused by a certain level, the Government will provide protection.
Saturday morning, Citigroup management structure under the Wachovia Agreement draft submitted to government officials.
hesitant policy-makers that the benefits of the scheme on the United States too. If the government further access to Citigroup's shares, Treasury Secretary Henry Paulson (Henry Paulson) ratio do not want too much You are not allowed to view links. Register or Login, otherwise the government will eventually hold Citigroup. Government officials fear that nationalization of the United States signs the market will be further shaken. They decided to invest 20 billion U.S. dollars is their limit.
informed sources, policy makers also discussed whether to continue Pandit as chief executive officer, concluded that sent him to step down will give the market a bad signal, may cause the company's turmoil.
Later that day, the Government informed the United States is willing to inject cash and limited trading Wachovia model to emulate the loss sharing agreement reached.
not everyone is satisfied. FDIC Chairman Bell (Sheila Bair) rescue plan for the reservations, as this may allow her agency is facing huge losses. She hoped that the government officials to consider Citigroup shareholders more punitive measures. FDIC spokesman said the limit deposit insurance fund is always the potential risk of Bell priority.
source said on Sunday morning, the differences led to Bell and those from other agencies had a heated debate.
over time, Citigroup executives more concerned about the possible shut out by the government.
around 6 pm on Sunday You are not allowed to view links. Register or Login, Paulson was a private conversation with Bell. He told her the importance of helping Citigroup, and said that if she can not play a substantive role, Fed and Treasury can not have her take action.
Bell agreed to participate, but only accept FDIC bear 100 billion in losses, Fed will be secured for most of the rest.
Two hours later, enough of the birth of a specific plan, Mr Pandit to Citigroup's board of directors informed of the plan. Directors basically no debate, less than 9 pm to approve the agreement. Around 11 pm, Pandit signed the agreement.