Shares of Vikram Pandit-led Citigroup today plunged by over 7 per cent on concerns related to the bank emerging as one of the biggest creditors to Lehman Brothers, which has filed for bankruptcy protection.
Today’s fall follows a plunge of over 15 per cent in Citigroup shares yesterday as well even as Pandit sought to assuage the fears about the bank’s financial health in a memo to its employees.
Citigroup shares plunged to as low as $14.10 in early morning trade today at the New York Stock Exchange, marking a fall of 7.5 per cent from its previous close of $15.24. The stock had plummeted 15.14 per cent yesterday.
After Lehman filed for bankruptcy and another rival Merrill Lynch being bought over by Bank of America in a distress sale, Pandit wrote to the bank’s employees that Citi was “well capitalised” and had “tremendous capacity” to meet commitments to its clients.
Falling prey to the deepening credit crisis, 158-year-old investment banking major Lehman Brothers yesterday filed for bankruptcy protection from its lenders, to whom it owes over $600 billion.
Naming Citigroup among its biggest unsecured creditors with close to $138 billion in bonds, Lehman said in the filing that it had assets of $639 billion and debt of $613 billion as of May 31.
In a late evening statement, a Citi spokesperson said: “Citibank N A is listed in the Lehman Brothers bankruptcy filing as an indenture trustee for bond debt of approximately $138 billion under Lehman Brothers Holdings Inc. Citi wishes to clarify that our role in this issue is administrative in nature and does not represent exposure for Citi to Lehman. Any assertions to the contrary are false.”