As part of a settlement with state and federal regulators, Citi announced that it will buy back about $7.5 billion of its retail clients' auction-rate securities. It has been claimed that Citi deliberately mislead customers by saying that the securities were safer than they were, leading to large losses for clients. This settlement is meant to compensate clients for those losses.
On July 18, 2008, Citigroup announced its second-quarter results, which included a net loss of $2.5 billion on $7.2 billion of write downs. Despite this, analysts had been expecting a loss of about $3.67 billion, sending shares of Citi up about 10% during the day.
A Goldman Sachs analyst cut all US brokers ratings and strongly advised people to sell shares of Citigroup and Merrill Lynch. The analyst stated that Citi is facing multiple problems including asset write downs of $9.8 billion, higher loss provisions for consumer credit, and the potential for additional capital raises, dividend cuts, or asset sales.
Citigroup announced that it was planing to close an underperforming hedge fund, Old Lane Partners, which was co-founded by Citi's CEO Vikram Pandit. Citi will buy what remains of the fund's assets as part of the closing.
Citigroup Inc. said Friday it is closing 32 offices and 540 ATMs in Japan as part of its restructuring plans for its Japanese consumer finance division, CFJ K.K.
As it previously announced, Citi is revamping its Japanese operations as it integrates the operations of brokerage firm Nikko Cordial Corp., which it acquired in 2007.
The closures are part of a broader plan that combines the management of Citi's banking, securities and related business, including 31 retail banking branches and 110 retail securities branches.
10-K Annual Report: Revenues of $81.7 billion decreased 9% from 2006, primarily driven by significantly lower revenues in CMB due to write-downs related to subprime CDOs and leveraged lending. Revenues outside of CMB grew 14%. International operations recorded revenue growth of 15% in 2007, including a 28% increase in International Consumer and a $1.8 billion increase in International GWM, partially offset by a 9% decrease in International CMB.
On February 4th, JP Morgan Chase, Citigroup, and Morgan Stanley stated that they would put into effect a set of "Carbon Principles" by which they would give investment priority to clean energy groups, and force any company planning to build coal-powered plants to show how they would deal with the carbon dioxide pollution in order to get investment money.
On Tuesday, January 15, Citigroup announced its fourth quarter results for 2007. Citi reported a loss of $9.83 billion for the quarter on write-downs of $18 billion. Also, Citi said that it planned to raise $14.5 billion in capital through the sale of convertible preferred securities and that it would cut its dividend by 41%.
Citi names Pandit CEO and Bischoff Chairman
On Monday, November 19, Goldman Sachs analyst William Tanona downgraded Citi's stock from "neutral" to "sell", predicting write-offs of $15 billion over the next two quarters. According to Tanona, worsening conditions in the U.S. housing market could force Citi to write-down the values of many of its holdings of CDOs and subprime-backed securities. Citi's stock price fell 5.9% in intra-day trading.
In the wake of Citi's announcement of more potential write-downs, the company's CEO, Charles Prince is stepping down.
After the over $6bn in write-downs included in Citi's 3Q earnings report, it looked like the worst might have passed. On November 1, however, Citi announced that it might write down as much as $11 billion more as investments in certain types of debt continue to fall in value. This sent stock prices of financial firms around the world down as fears about continued losses from the credit market increased.
Credit Suisse and CIBC World Markets downgraded the largest U.S. bank, with CIBC citing concern Citi might have to cut its dividend. CIBC's lowered its rating of Citi to "Sector Underperformer" from "Sector Performer", raising concerns about its exposure to turbulent market conditions.
On October 15, a consortium of U.S. banks, including Bank of America, Citibank, and JP Morgan Chase, announced its plan to create an $80 billion fund to help maintain liquidity in the credit markets. The fund will buy assets from structured investment vehicles, or SIVs, which invest in short-term commerical debt and asset-backed securities. Though it could help stabilize the debt market, the establishment of such a fund signaled the severity of the credit crunch, causing further drops in investor confidence and stock prices.
Citi released its earnings for the third quarter of 2007 on October 15, which showed a 57% drop in net income for the quarter. Over the course of the week, earnings reports from other financial services firms, including fellow banking giant Bank of America, further raised apprehensions about the finance sector in general, which put additional downward pressure on Citi's stock price.
After writing down $5.9B in subprime losses Citi announces a major reorganization in which it merges its alternative investment unit with its investment banking division. At the same time Deutsche Bank downgraded the company's stock.
The acquisition of Nikko Cordial will be crucial as Japan continues its recovery; in March 2007, the bank was reported to hold 2.02 trillion in assets, making it the largest company according to the Fortune 2000.
Citi removes 15,000 from the Information Technology and back-office departments, making way for acquisitions in high-growth oriented regions.
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