KEY POINTS:
Citigroup executives today will continue working with Wall St regulators and American Treasury officers to shore up the stricken financial giant and prevent fallout from hitting global markets this week.
With yet another global titan on the brink, and others including JP Morgan and Deutsche Bank having been
savaged too, observers across the world are considering the possibility that the financial system might not be at rock bottom, but at the edge of yet another precipice.
Citigroup took out adverts in major US newspapers over the weekend in an attempt to boost customer confidence, after a downward spiral in its share price raised doubts about its future.
The tactic came as executives and officials huddled in meetings through the weekend to decide whether more radical steps are needed to restore order.
With US$2 trillion ($3.7 trillion) in assets, and 200 million customer accounts in over 100 countries, Citigroup is among the most powerful financial institutions in the world.
And yet its shares lost 60 per cent of their value in five days as investors questioned whether it has enough money to absorb billions more in losses on loans and commercial mortgage investments.
Although governments around the world typically insure depositors' money, and although Citigroup has access to potentially unlimited funding from the US Federal Reserve or the government's Wall St bailout fund, executives still fear that the bad headlines could cause a panic among customers.
The advertising blitz is designed to reassure anyone who may be worried.
The company ran full-page ads in major newspapers that acknowledge "our financial markets have been tested in unprecedented ways", but argue that the company's strength is rooted in a broad range of businesses and the expertise of its staff.
It says customers can look to Citigroup for "providing stability" and "securing the future" and concludes: "Now, more than ever, you can feel confident that Citi never sleeps."
Citigroup is understood to have approached its existing sovereign wealth fund shareholders from the Middle East and Asia to gauge their appetite for buying additional stakes in the bank. Yesterday it emerged that HSBC is positioning itself to acquire some of Citigroup's assets in Asia and Latin America if the US group's board decides that a break-up or a limited sale of assets would provide it with a route through the crisis in confidence which has raised doubts about the future of what, until recently, was the world's biggest bank.
Other financial services groups are also circling Citigroup, although virtually none has the appetite or resources to swallow the company whole.
It is understood that the Federal Reserve and the US Treasury have now approached all the major US banks including Morgan Stanley and Goldman Sachs to ask whether they would be willing to support Citigroup in the unlikely event of its collapse.
An additional capital injection from the US Treasury's US$700 billion bailout fund is thought unlikely, as it could only be made in the form of preferred shares.
"The only thing that would boost confidence in Citigroup is a boost to its common equity," said a person close to the bank.
"This is a crisis of confidence rather than one of capital or liquidity."
President-elect Barack Obama's pick of Timothy Geithner, president of the New York Federal Reserve, as the next Treasury secretary has intensified the high-stakes drama over the future of Citigroup.
In his current role, he has responsibility for regulating the big Wall St banks and the New York Fed was this weekend intimately involved in discussions on how best to shore up market confidence in the company.
Along with current Treasury secretary Hank Paulson, Geithner held talks on Friday with Citigroup management about making a public expression of support for the company, or providing a new infusion of government cash.
The success or failure of the authorities' actions will be a very public test for Geithner, and one he will have to defend during confirmation hearings in the new year.
Other options for Citigroup include the possible ouster of Vikram Pandit, its unloved chief executive, and more radical surgery such as spinning off divisions of the banking giant or selling the bank outright.
- INDEPENDENT, AGENVIE
ColourBar1: Frantic effort to prop up global titan
Blurb1: Citigroup shares lose 60 per cent of their value in five days
Sidebar1:
TextBox1: INSIDE
Rock bottom still to come - B7
Fight to survive on High St - B7
Caption1:
Citigroup executives today will continue working with Wall St regulators and American Treasury officers to shore up the stricken financial giant and prevent fallout from hitting global markets this week.
With yet another global titan on the brink, and others including JP Morgan and Deutsche Bank having been savaged too, observers across the world are considering the possibility that the financial system might not be at rock bottom, but at the edge of yet another precipice.
Citigroup took out adverts in major US newspapers over the weekend in an attempt to boost customer confidence, after a downward spiral in its share price raised doubts about its future.
The tactic came as executives and officials huddled in meetings through the weekend to decide whether more radical steps are needed to restore order.
With US$2 trillion ($3.7 trillion) in assets, and 200 million customer accounts in over 100 countries, Citigroup is among the most powerful financial institutions in the world.
And yet its shares lost 60 per cent of their value in five days as investors questioned whether it has enough money to absorb billions more in losses on loans and commercial mortgage investments.
Although governments around the world typically insure depositors' money, and although Citigroup has access to potentially unlimited funding from the US Federal Reserve or the government's Wall St bailout fund, executives still fear that the bad headlines could cause a panic among customers.
The advertising blitz is designed to reassure anyone who may be worried.
The company ran full-page ads in major newspapers that acknowledge "our financial markets have been tested in unprecedented ways", but argue that the company's strength is rooted in a broad range of businesses and the expertise of its staff.
It says customers can look to Citigroup for "providing stability" and "securing the future" and concludes: "Now, more than ever, you can feel confident that Citi never sleeps."
Citigroup is understood to have approached its existing sovereign wealth fund shareholders from the Middle East and Asia to gauge their appetite for buying additional stakes in the bank. Yesterday it emerged that HSBC is positioning itself to acquire some of Citigroup's assets in Asia and Latin America if the US group's board decides that a break-up or a limited sale of assets would provide it with a route through the crisis in confidence which has raised doubts about the future of what, until recently, was the world's biggest bank.
Other financial services groups are also circling Citigroup, although virtually none has the appetite or resources to swallow the company whole.
It is understood that the Federal Reserve and the US Treasury have now approached all the major US banks including Morgan Stanley and Goldman Sachs to ask whether they would be willing to support Citigroup in the unlikely event of its collapse.
An additional capital injection from the US Treasury's US$700 billion bailout fund is thought unlikely, as it could only be made in the form of preferred shares.
"The only thing that would boost confidence in Citigroup is a boost to its common equity," said a person close to the bank.
"This is a crisis of confidence rather than one of capital or liquidity."
President-elect Barack Obama's pick of Timothy Geithner, president of the New York Federal Reserve, as the next Treasury secretary has intensified the high-stakes drama over the future of Citigroup.
In his current role, he has responsibility for regulating the big Wall St banks and the New York Fed was this weekend intimately involved in discussions on how best to shore up market confidence in the company.
Along with current Treasury secretary Hank Paulson, Geithner held talks on Friday with Citigroup management about making a public expression of support for the company, or providing a new infusion of government cash.
The success or failure of the authorities' actions will be a very public test for Geithner, and one he will have to defend during confirmation hearings in the new year.
Other options for Citigroup include the possible ouster of Vikram Pandit, its unloved chief executive, and more radical surgery such as spinning off divisions of the banking giant or selling the bank outright.
- Independent
and agencies
ColourBar1: Frantic effort to prop up global titan
Blurb1: Citigroup shares lose 60 per cent of their value in five days
Sidebar1:
TextBox1: INSIDE
Rock bottom still to come - B7
Fight to survive on High St - B7
Caption1:
Citigroup executives today will continue working with Wall St regulators and American Treasury officers to shore up the stricken financial giant and prevent fallout from hitting global markets this week.
With yet another global titan on the brink, and others including JP Morgan and Deutsche Bank having been savaged too, observers across the world are considering the possibility that the financial system might not be at rock bottom, but at the edge of yet another precipice.
Citigroup took out adverts in major US newspapers over the weekend in an attempt to boost customer confidence, after a downward spiral in its share price raised doubts about its future.
The tactic came as executives and officials huddled in meetings through the weekend to decide whether more radical steps are needed to restore order.
With US$2 trillion ($3.7 trillion) in assets, and 200 million customer accounts in over 100 countries, Citigroup is among the most powerful financial institutions in the world.
And yet its shares lost 60 per cent of their value in five days as investors questioned whether it has enough money to absorb billions more in losses on loans and commercial mortgage investments.
Although governments around the world typically insure depositors' money, and although Citigroup has access to potentially unlimited funding from the US Federal Reserve or the government's Wall St bailout fund, executives still fear that the bad headlines could cause a panic among customers.
The advertising blitz is designed to reassure anyone who may be worried.
The company ran full-page ads in major newspapers that acknowledge "our financial markets have been tested in unprecedented ways", but argue that the company's strength is rooted in a broad range of businesses and the expertise of its staff.
It says customers can look to Citigroup for "providing stability" and "securing the future" and concludes: "Now, more than ever, you can feel confident that Citi never sleeps."
Citigroup is understood to have approached its existing sovereign wealth fund shareholders from the Middle East and Asia to gauge their appetite for buying additional stakes in the bank. Yesterday it emerged that HSBC is positioning itself to acquire some of Citigroup's assets in Asia and Latin America if the US group's board decides that a break-up or a limited sale of assets would provide it with a route through the crisis in confidence which has raised doubts about the future of what, until recently, was the world's biggest bank.
Other financial services groups are also circling Citigroup, although virtually none has the appetite or resources to swallow the company whole.
It is understood that the Federal Reserve and the US Treasury have now approached all the major US banks including Morgan Stanley and Goldman Sachs to ask whether they would be willing to support Citigroup in the unlikely event of its collapse.
An additional capital injection from the US Treasury's US$700 billion bailout fund is thought unlikely, as it could only be made in the form of preferred shares.
"The only thing that would boost confidence in Citigroup is a boost to its common equity," said a person close to the bank.
"This is a crisis of confidence rather than one of capital or liquidity."
President-elect Barack Obama's pick of Timothy Geithner, president of the New York Federal Reserve, as the next Treasury secretary has intensified the high-stakes drama over the future of Citigroup.
In his current role, he has responsibility for regulating the big Wall St banks and the New York Fed was this weekend intimately involved in discussions on how best to shore up market confidence in the company.
Along with current Treasury secretary Hank Paulson, Geithner held talks on Friday with Citigroup management about making a public expression of support for the company, or providing a new infusion of government cash.
The success or failure of the authorities' actions will be a very public test for Geithner, and one he will have to defend during confirmation hearings in the new year.
Other options for Citigroup include the possible ouster of Vikram Pandit, its unloved chief executive, and more radical surgery such as spinning off divisions of the banking giant or selling the bank outright.
- INDEPENDENT, AGENCIES
