Citigroup Inc Chief Executive Officer Vikram Pandit told employees he doesn’t plan to break up the company, aiming to reassure workers as the stock resumed a skid that has erased more than half its value in three days.
Pandit and Chief Financial Officer Gary Crittenden, speaking on a worldwide conference call this morning, also said they don’t expect to sell the Smith Barney brokerage unit, said two people who listened to the call and declined to be identified because it wasn’t open to the public.
The call came as Citigroup’s board, led by Chairman Win Bischoff and independent director Richard Parsons, prepared to meet today at the bank’s headquarters in New York, said a person familiar with the company’s plans who declined to be identified because the deliberations are private. Bischoff, interviewed at a conference in Portugal today, declined to comment on any potential changes to the board.
“It is unclear what Citigroup can do in the near term to restore confidence,” Jason Goldberg, an analyst at Barclays Capital in New York, wrote to clients today. Prior to the collapse of Wachovia Corp and Washington Mutual Inc, their tumbling shares triggered deposit outflows and rating-agency downgrades, he wrote. “The market may be implying some sort of regulatory intervention.”
Citigroup shares dropped 69 cents, or 15 per cent, to $4.02 at 11:41 am in New York, giving the company a stock market value close to $21 billion.
Citigroup, once the biggest US bank, with a stock market value of $274 billion at the end of 2006, dropped yesterday to about $26 billion, slipping to number 5 after Minneapolis-based US Bancorp. A plan Pandit announced this week to cut costs by shedding 52,000 jobs and an endorsement by billionaire Saudi investor Prince Alwaleed bin Talal did not assuage shareholders’ concern that bad loans and securities writedowns may extend a yearlong run of net losses totalling $20 billion.
“Investors right now aren’t convinced that we are done seeing dead bodies on the Citigroup balance sheet,” said William Fitzpatrick, an equity analyst at Optique Capital Management Inc in Milwaukee, which oversees about $1 billion and doesn’t own Citigroup shares. “That’s what the sell-off is, concern over more and more losses over the next couple of quarters.”
Citigroup spokeswoman Christina Pretto declined to comment on the board meeting. She reiterated a statement made by the New York-based company earlier this week that it has “a very strong capital and liquidity position and a unique global franchise.” Citigroup was up 92 cents at $5.63 in German trading today.
Including a $25 billion capital injection from the US Treasury under the $700-billion Troubled Asset Relief Program, the company has at least $50 billion of capital in excess of the amount required by regulators to qualify as “well capitalised”. Capital is the cushion banks must keep to absorb losses and protect depositors.
