Citigroup weighs options as shares plunge to 15-year low

21 November 2008

Citigroup, till recently the nation's third largest US bank by market capitalisation and the only one with a truly global presence, is considering sale of parts of the company in the face of declining share prices.

Citigroup now finds itself in the centre of the vortex as America's banks continue to face a major crisis of confidence. While some are struggling to maintain their existence in the face of declining share prices, others have already capitulated and declared bankruptcy. 

The century-old Citigroup's precipitous stock-market plunge accelerated on yesterday, sending shock waves through the financial world. The shares slumped 26 per cent yesterday, halving the company's value in just four days. So far this year, the Citigroup stock is down 83 per cent. Currently, they are trading at their lowest in a decade and a half.

Citigroup, once the biggest US banks, with a stock market value of $274 billion at the end of 2006, dropped yesterday to about $26 billion, slipping to No 5, after Minneapolis-based US Bancorp.

A plan CEO Vikram Pandit announced this week to cut costs by shedding 52,000 jobs and an endorsement by billionaire Saudi investor Prince Alwaleed bin Talal didn't assuage shareholder concerns that bad loans and securities write-downs may extend a yearlong run of net losses totaling $20 billion. (See: Citigroup to slash 50,000 jobs worldwide)

The company's shares fell 26 per cent in New York yesterday, closing below $5 for the first time since 1994, as stocks worldwide sank on concerns a global recession may deepen. JPMorgan Chase & Co, the biggest US bank, fell 18 per cent to $23.38, while No 2 Bank of America Corp declined 14 per cent to $11.25 and Wells Fargo & Co fell 7.7 per cent to $22.53. US Bancorp fell 6.4 per cent to $22.12.