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Thread: Citibank Death Pool

  1. #1
    God/dess Deogol's Avatar
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    Default Citibank Death Pool

    So, anyone willing to pony up a date when Citicorp finally is declared insolvent?

    I can tell ya it couldn't happen to a better company that is for sure.

  2. #2
    Jay Zeno
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    Default Re: Citibank Death Pool

    With over $2 trillion ($2,000,000,000) in assets? It'll take a while, won't it? However, I'd like to apply for the executor job if it happens....

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    Default Re: Citibank Death Pool

    ^^^ ultimately it depends on how long Citi can avoid having to 'mark to market' the true value of their derivatives holdings and book the revised value on their corporate balance sheet. Between the Super SIV fund, private sale to hedge funds with 1 year guaranteed buybacks etc, the day of reckoning can probably be postponed for quite a while.

    However, based on a recent aborted derivatives auction which were drawing bids of 40 cents on the dollar before the auction was called off, it's entirely possible that Citi is already bankrupt ... if your definition of bankruptcy consists of current value of assets being exceeded by current value of liabilities. But as long as the Fed / SEC / auditors will permit the derivatives liabilities to stay off the corporate balance sheet, it's business as usual.

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    Star_bare_elegance
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    Default Re: Citibank Death Pool

    UMMMM does this mean i need to take my money out of my citibank account? my car loan is with them as welll...

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    Featured Member Vamp's Avatar
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    Default Re: Citibank Death Pool

    Arch critic calls for Citigroup to be broken upBy James Quinn, Wall Street Correspondent
    Last Updated: 7:38am GMT 06/11/2007



    The analyst who triggered the departure of Citigroup chairman and chief executive Charles "Chuck" Prince has called on his successors to break up the banking conglomerate.

    Meriedith Whitney, the CIBC World Markets' financial services analyst, believes the only way forward for new chairman Robert Rubin and interim chief executive Sir Win Bischoff is to carve the bank up and sell it off.

    Ms Whitney's comments last week on the state of Citi's balance sheet sparked a $369bn (£177bn) fall in world markets and helped trigger an emergency meeting of the bank's board at the weekend at which Mr Prince tendered his resignation.

    Citi is the largest victim to date of the global credit crisis, announcing further write-downs of up to $11bn on top of $5.9bn revealed in the third quarter.

    Asked about the possibility of a Citi break-up, Ms Whitney, who received death threats following her comments last week, said: "That's really the only thing they can do. They don't have the capital to manage it as an ongoing entity."

    advertisementSir Win had different ideas: "I see my role to hand over a vibrant firm which has learnt from its mistakes and is ready once again to take advantage of its considerable assets and heritage. I believe in the strategy," he said.

    Ms Whitney's views stem from her belief that Citi does not have enough capital to meet its existing commitments, something the bank denied in a statement on its financing on Sunday evening.

    She believes that Citi needs to begin to sell off non-core asserts or cuts its dividend. But chief financial officer Gary Crittenden, a contender to replace Mr Prince, yesterday told banking analysts that Citi has no intention of cutting the dividend.

    Ms Whitney responded by saying: "Clearly the maths do not add up."

    Damian Reece: Rubin must admit model wasn't working
    Supermodel Gisele refuses to be paid in weak dollars
    How Citi could not hold back the sub-prime deluge
    Her comments came as Saudi Prince Alwaleed Bin Talal, whose Kingdom Holdings investment vehicle is Citi's largest shareholder with a 3.6pc stake, said he would like to see Mr Prince's predecessor Sandy Weill return to run the business.

    Mr Weill retired as Citi chairman in April 2006, having stood down as chief executive in October 2003, and is credited with leading a series of mergers and acquisitions which created the so-called banking supermarket that the group has become.

    It also emerged that the Saudi prince withdrew his support for Mr Prince on Thursday, the day on which Ms Whitney's damning note became public.

    In addition to pending fourth-quarter write-downs, Citi yesterday restated its third-quarter profit as $2.21bn and not the $2.38bn reported last month.

    Standard & Poor's placed the bank's credit rating on review. Citi shares, which had fallen 25pc in the three weeks, fell a further $2.42 to $35.31 in mid-afternoon trading in New York.


    Information appearing on telegraph.co.uk is the copyright of Telegraph Media Group Limited and must not be reproduced in any medium without licence. For the full copyright statement see Copyright

    http://www.telegraph.co.uk/core/Cont...&site=1&page=0
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    Banned Katrine's Avatar
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    Default Re: Citibank Death Pool

    Quote Originally Posted by Star_bare_elegance View Post
    UMMMM does this mean i need to take my money out of my citibank account? my car loan is with them as welll...
    Probably not. What type of account do you have there?

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
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    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

  7. #7
    Star_bare_elegance
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    Default Re: Citibank Death Pool

    savings/checking

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    Banned Katrine's Avatar
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    Default Re: Citibank Death Pool

    I don't know, to be honest. I havn't been through a "run on the bank" in my memory. I think you'll be ok. Your checking is prob. FDIC and they can sell your loan to someone else. I think.

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

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    Default Re: Citibank Death Pool

    hmm. i have a citi credit card. I wonder if they will sell my debt elsewhere? It happened to my other card once- got sold to BoA

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    Default Re: Citibank Death Pool

    This is just a fantastic opportunity to buy Citigroup shares on the cheap.

    "When the Market is fearful, I become greedy; When the Market is greedy, I become fearful"
    - Warren Buffett

    Here's my public trade 300 Shares of Citigroup @ $35 or $10500

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    Default Re: Citibank Death Pool

    xan, you have far more 'balls' than I do ... in trusting that Citi has come clean with their losses. I agree with your 'bargain' theory in general terms, but am waiting until at least next quarter to see how well the Super SIV rescue goes and how much more red ink Citi is forced to book in the way of writedowns.

    hmmm, considering that Citi closed at $33.41 allow me to extend my condolences on your loss.

  12. #12
    Banned Katrine's Avatar
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    Default Re: Citibank Death Pool

    Stop-loss that sucker, lol!

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
    "And do the cats give a shit? No, they do not. Why? Because they're cats."-from The Onion

    Quote Originally Posted by Mia M
    If a cupcake was tossed at me... well, I'd only be upset if it missed my mouth

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    Default Re: Citibank Death Pool

    Quote Originally Posted by Katrine View Post
    Stop-loss that sucker, lol!

    I can't believe why you can't get excited about fire sales. If this thing goes to $32, I'll add another 100 shares. At $30, I'll be adding another 100.

    Citibank pays $2.16 cents a share as dividend or a dividend yield of 6.75%. Even if the stock doesn't move for the next 10 years, it is a much better investment. Of course at $32, and a P/E of 9 the downside risk is very low

    As C price drops it stocks become less and less riskier.

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    Default Re: Citibank Death Pool

    ^^^ agreed, AFTER C's share price approaches an actual bottom. IMHO this week's drop is only the tip of the iceberg in regard to toxic mortgage debt / derivatives writeoffs. I'll start taking a serious look when C's share price is in the low 20's a couple of months from now ! In the meantime, I'm getting a far higher rate of return from my precious metal mining stocks !

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    Default Re: Citibank Death Pool

    Quote Originally Posted by Melonie View Post
    ^^^ agreed, AFTER C's share price approaches an actual bottom. IMHO this week's drop is only the tip of the iceberg in regard to toxic mortgage debt / derivatives writeoffs. I'll start taking a serious look when C's share price is in the low 20's a couple of months from now ! In the meantime, I'm getting a far higher rate of return from my precious metal mining stocks !
    Agree with your approach. But, I've never been able to successfully predict the bottom of anything. It is best to Dollar Cost Average on the way down than to time it near bottom.

    My definition of a bottom is pretty simple. If a solid company's Dividend/Earnings Yield go above the the 10 Year T Bill (currently 4.7%), then you keep buying whenever you get a chance. At worst, your returns matches a Bond and the upside is huge.


    I honestly can't value precious mining stocks, so I stay away from them

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    Default Re: Citibank Death Pool

    While not taking a stand on the stock, one way or the other, putting a value on any company based on their dividend is risky. While it is attractive at this point, there isn't any assurance it will be there next year. It would not be the first traded stock to have to stop paying a dividend, or reducing the amount, because of financial trouble.

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    Default Re: Citibank Death Pool

    Quote Originally Posted by texasdancer View Post
    While not taking a stand on the stock, one way or the other, putting a value on any company based on their dividend is risky. While it is attractive at this point, there isn't any assurance it will be there next year. It would not be the first traded stock to have to stop paying a dividend, or reducing the amount, because of financial trouble.
    Agree. Earnings is the proxy (Actually Owners Earnings is the real proxy)

    But Owners Earnings > Net Income > Dividends

    So, if Div/Price itself is 6.75%, Owners Earnings/Price must be greater than 10%. This stock is dead cheap. Of course, this only applies to solid companies like Citi

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    God/dess Deogol's Avatar
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    Default Re: Citibank Death Pool

    Quote Originally Posted by xanfiles1 View Post
    I can't believe why you can't get excited about fire sales. If this thing goes to $32, I'll add another 100 shares. At $30, I'll be adding another 100.

    Citibank pays $2.16 cents a share as dividend or a dividend yield of 6.75%. Even if the stock doesn't move for the next 10 years, it is a much better investment. Of course at $32, and a P/E of 9 the downside risk is very low

    As C price drops it stocks become less and less riskier.
    Hmmm.

    I remember when Sun (JAVA) was 40 bucks. Now it's five.

    DCA only works when it goes back up!

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    Default Re: Citibank Death Pool

    Quote Originally Posted by Deogol View Post
    Hmmm.

    I remember when Sun (JAVA) was 40 bucks. Now it's five.

    DCA only works when it goes back up!
    There is a difference between Sun and Citigroup. There is a difference between eToys and Citigroup.

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    Default Re: Citibank Death Pool

    ^^^ you're absolutely right about a difference. SUN and eToys were forced to book 100% of their losses, whereas Citigroup has booked only a tiny fraction !!!

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    Default Re: Citibank Death Pool

    Tangent: the Big Five Canadian banks are down too, though obviously not that much, and they seem to have minimal exposure to this mess... seems to be a spillover effect. I'm loading up on Bank of Montreal and Royal Bank. I'm pretty much sure that they'll be fine... these guys haven't skipped a dividend since before Canada was a country... seriously. BMO is pushing close to a 5% dividend yield (with favourable tax), so I figured it's a good deal.

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    Default Re: Citibank Death Pool

    ^^^ if your home currency is the Canadian dollar, I agree this is a good deal.

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    Default Re: Citibank Death Pool

    The problem there is, you don't know what you are getting yourself into. You are putting to much faith in the talking heads on TV that are telling you it's cheap. Sure it's cheap relative to last year, but that doesn't tell you where it's going. Tech was a fire sale @ NASDAQ 4000 as well, that is where it was, not where it is going. I can't believe you have me repeating Cramer's advice...

    Do you know anything about the future profitability of C or any financial? What is the value of what they have on their books (and hiding off the books)? Do you know implications of FASB 157, and what happened to the S&Ls when they couldn't stick bad loans into goodwill anymore?

    Enjoy your losses...

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    Default Re: Citibank Death Pool

    o you know anything about the future profitability of C or any financial? What is the value of what they have on their books (and hiding off the books)?
    nobody really knows, but some educated guesses are possible ...

    from a professional investor's BBS ->


    (snip)"Now, let's translate those sickening dropoffs to the real world, shall we?

    First, we must total up all the "level 3" assets (translation: dead dog CDOs) and other relevant stats sitting on the books of the Wall Street banks:

    Bank: L3 Asssets: Equity: % L3/Equity:
    ----------------------------------------------------------------
    Citi $135b $128b 105%
    GS $72b $39b 185%
    MS $88b $35b 251%
    Bear $20 b $13b 154%
    Leh $35b $22b 159%
    Mer $16b $42b 38%

    Total: $366b $279b
    Average: $66b $46b 148%

    (*note: these stats come from the poster "Bernard" on Roubini's site, and I am assuming they are reasonably accurate).

    Now, for the scary math part.

    Taking an average of what ALL the ABX indices have fallen (from the BBB- right through the AAA), I get an average drop of 50%,

    Okay, so let's apply that 50% drop to the above "Level 3 and see what it does to the overall solvency of these top Wall Street banks:

    Average L3 of $66b, divided by 2 = $33b

    $33b in L3 asset worth, minus the average of $46b = minus $13b

    That's right. Instant insolvency for the overall group!!! (Some more than others and a few not at all, but pretty much across the board.)

    Oh, but it gets better.

    Because remember, It ain't just Wall Street stuck with these dead dogs. Noooooo, they managed to sell off al the puppies (about another $2.5 trillion) to every pension fund, mutual fund, money market fund, bank, insurance company, and other bagholder--ALL of whom are facing the IDENTICAL writedown in their "Assets"."(snip)


    If the above guesstimate is anywhere near accurate, this means that Citigroup is likely to have a total in the ballpark of 67 billion dollars worth of off-balance-sheet 'Level 3' losses. So far Citigroup has actually written off, what, something less than $2 billion, against their balance sheet !!! What do you expect will happen to Citi's share price when the other 65 billion has to be booked as an on balance sheet loss ? Even half of that guesstimate i.e. $34 billion ? ... even 10% of that guesstiment i.e. 6.7 billion ?

    Citi shares closed the week at 33.10 .... did you 'dollar cost average' any more C shares ?

    Personally, after reading this guesstimated analysis, I'm considering adding some January Puts against Morgan Stanley or Goldman Sachs ...

    I guess that if there is a lesson to be learned from this, it's that you can't friggin trust anybody's reported numbers anymore in regard to accurately describing their true financial health. Even though the numbers may be technically correct from a legal standpoint, they are able to disregard so many relevant factors as to render the resulting calculation meaningless. This applies to Citi's official P/E ratio of 9 (which might actually be negative 100 @!) in the same way it applies to gov't inflation numbers that don't count food and energy (and which allow rising prices for imported goods to LOWER the resulting domestic inflation number). Unfortunately, it appears that the rest of the world is finally catching on to the fact that the bulls#!t published numbers can't be trusted anymore, which is one of the reasons why the foreign investors are now heading for the exits.

    ~
    Last edited by Melonie; 11-10-2007 at 04:37 AM.

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    Default Re: Citibank Death Pool

    in the way of an update ...



    Citi comes clean and re-estimates their subprime losses to be in the $15 billion ballpark versus the $11 billion previously announced. Goldman cuts Citi's stock rating to 'sell'. Unspoken issue in Wall St. back rooms is that today's extra $4 billion dollars in announced losses may just be the tip of the proverbial iceberg.

    Citi share price falling towards the $32 a share ballpark ... again !

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