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There is noise that Citi is looking for $15BB...
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Citibank antifraud move draws cashflow conspiracy chatter
http://www.networkworld.com/news/200...-cashflow.html
A Citibank spokesman Wednesday dismissed outright suggestions in the blogosphere that a recent decision by the company to quietly reduce the daily ATM cash withdrawal limits of some of its customers had something to do with Citibank's cash-reserve position.
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Citi looks to secure further $14bn in new capital
http://www.ft.com/cms/s/c6eb81e0-c08...print=yes.html
Citi looks to secure further $14bn in new capital
By Henny Sender in New York
Published: January 11 2008 22:02 | Last updated: January 11 2008 22:02
Citigroup is putting the final touches to its second big capital-raising effort in as many months, seeking up to $14bn from Chinese, Kuwaiti and public market investors.
Under the proposal being discussed, the bulk of the money – roughly $9bn – would be most likely to come from China, people familiar with the negotiations say. The Kuwait Investment Authority would contribute about $1bn, while $2bn to $4bn would be raised through a public placement of shares.
The formula is still being adjusted and there could be last-minute changes, the people involved say. It is also possible other investors will participate.
The deal underscores the depth of the problems faced by banks that suffered heavy losses in the US subprime mortgage crisis. It would follow an injection of $7.5bn into Citigroup by the Abu Dhabi Investment Authority in late November.
“The second round is going very well, because Citi is seen as US Inc,” says the regional head of a US investment bank in the Middle East. Citi de*c*lined to comment.
As more US financial institutions raise capital from foreign sources, largely from sovereign wealth funds, there is a growing debate about the potential domestic political reaction, particularly during a presidential election year.
The deal would mark the first time that the KIA has invested in an ailing US financial institution. KIA, which is known as a conservative investor, is taking a portfolio approach to the US financial crisis, looking to acquire small stakes in many troubled financial firms rather than putting a large chunk of money in one bank.
Staff at the KIA could not be reached for comment.
The deal highlights China’s growing importance as an exporter of capital. The Chinese government has emphasised a policy of investing abroad to keep the ample liquidity in China from feeding a bubble in shares and property.
“They want to recycle money as there is too much in China,” says Fred Hu, a China-based managing director at Goldman Sachs. “Because of capital con*trols, only the government can take the money and put it offshore.”
The most likely Chinese investor in the Citigroup deal is probably a bank such as China Development Bank, which in addition to funding infrastructure projects at home also finances Chinese companies as they expand abroad. The company, which is not listed, also has taken shares in financial institutions such as Barclays.
Another possibility would be an investment arm of the government, although the distinction between government and quasi-private money is often blurred in China.
Other potential Chinese investors include China Investment Corporation, which invests China’s res*erves abroad, and recently put $5bn into Morgan Stanley. China’s State Administration of Foreign Exchange also invests directly offshore.
Citi’s capital-raising structure differs from the first round. That involved a complex security that converts into Citi shares with a generous 11 per cent coupon.
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Re: Rumor: Citi bank looking for funding.
Oh yeah, SWF brilliance continuing at work.
I particularly like KIA - killed in action?Comment
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Re: Rumor: Citi bank looking for funding.
From WSJ:
Citigroup announced a net loss of $9.83 billion and $22 billion in write-downs and consumer credit losses. The bank is raising $12.5 billion through investments by Singapore's GIC, Kuwait Investment Authority and others. Full article coming shortly.Comment
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Re: Rumor: Citi bank looking for funding.
Citigroup's hopes for investment from Chinese bank hit a snag
By Eric Dash
Published: January 14, 2008
NEW YORK: Citigroup's talks with the China Development Bank to make a multibillion-dollar investment in the company have reached an impasse after the Chinese government spurned a possible deal, according to a person close to the situation.Ed.Comment
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Re: Rumor: Citi bank looking for funding.
$7.5B from Abu Dhabi
$12.5B from Singapore, Sandy Weill, Alwaleed, Kuwait Investment Authority, etc.
$1B from dividend cut this quarter
$2B from additional stock offering
Total: $23B net capitalization
$4B loan loss reserves increased (future losses)
And still Citi is not done...
As I've experienced first hand, the last ones into a sinking ship (that doesn't quite sink) are the ones to make any money.
If the ship sinks, all bets of course are off.Comment
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Re: Rumor: Citi bank looking for funding.
So are these the "last ones into a sinking ship"? Or more to come because they are too early?Originally posted by c1ue View PostComment
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Re: Rumor: Citi bank looking for funding.
There is no way to tell without an accurate picture of Citi's actual situation.Originally posted by GRG55
However, the trend is clear and not promising: each revelation of Citi's losses has been eclipsed by much greater losses later on and larger infusions.
Furthermore the source of this negative trend - failing home loans and their dependent MBS/CDO/CDO(n) securities and derivatives - is continuing to worsen.
It is possible Pandit is doing a typical CEO 'kitchen sink' bad news dump, but it is equally possible that the bad news dump to date is all of the bad news thus far - not the bad news to come from continuing real estate related declines.
In addition, the smart analysts out there have been pointing out that Citi is looking at 9 digit losses; to date Citi has only written off $21B or so.
Given all this, I feel very comfortable in having sold them and continuing to stay out.
I look to more losses - at least to the $40B range and possibly into the 9 digits spoken of.
When Citi hits $10 a share, I'll re-evaluate.
As for the early investors, they get f**ked unless they double down all the way to the end and the company doesn't fail.Comment
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Re: Rumor: Citi bank looking for funding.
They are too early, but the decision is probably political and strategic, nothing much to do with investment.
Originally posted by GRG55 View PostComment
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Re: Rumor: Citi bank looking for funding.
They aren't paying retail for their stakes either, unlike you or I if we wish to buy Citi et al.Originally posted by c1ue View PostComment
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Re: Rumor: Citi bank looking for funding.
Who are the analysts and are their reports available?Originally posted by c1ue View PostJim 69 y/o
"...Texans...the lowest form of white man there is." Robert Duvall, as Al Sieber, in "Geronimo." (see "Location" for examples.)
Dedicated to the idea that all people deserve a chance for a healthy productive life. B&M Gates Fdn.
Good judgement comes from experience; experience comes from bad judgement. Unknown.Comment
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Re: Rumor: Citi bank looking for funding.
Originally posted by c1ue View Post
The early investors are just regimes that are do the bailing out on behalf of the American government.
Chances of Citigroup failing is very slim, if Citigroup does fail, it will mean the end of America as an economic superpower. Stuff like making chips, cars, and similar stuff, the chinese, korean and japanese can do. So there is not much left after you remove Citigroup, Merill Lynch, Morgan Stanley, etc.Comment
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Re: Rumor: Citi bank looking for funding.
Jim,Originally posted by Jim Nickerson
I don't pay for reports.
The single individual I have the most respect for w/ respect to analyzing Citibank: Minyan Peter on Minyanville.
The article that crystallized my thinking about this person:
http://www.minyanville.com/articles/.../index/a/14318
Minyanville article list:
http://www.minyanville.com/library/s...contrib_id=106
You can also look at Mish - he does a decent summary of a number of the more obvious points.Last edited by c1ue; January 15, 2008, 02:50 PM.Comment
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Re: Rumor: Citi bank looking for funding.
Our information is that the reason the news keeps getting worse is that no one at Citi seems to understand the macro environment that is driving the losses: a debt deflation and all that goes with it. When the Japanese commercial banks started to experience a post credit bubble demand implosion that hit from the consumer, business, and finance sectors all at once, the "worst case" firebreaks kept getting breeched. They lacked the imagination and understanding of the nature of the problem they were facing. It was a case of institutional blindness: they simply could not collectively comprehend the object in front of them and take rational action to avoid it. They have been in a demand deficit position ever since, and have counted on the US and China for demand. The lack of obvious sources of demand do support deflationists worries. But do not underestimate the ability and willingness of governments to maintain a money supply in excess of the all-goods supply.Originally posted by c1ue View Post
One of the challenges these guys must be facing reminds me of conversations I had with investors when I was raising money for a company I was running in 2003. After so much continuous price appreciation, the investors' mindset was that price depreciation was going to reverse or at least stop soon. We were picking up over 100 customers per quarter, and this during the worst tech depression ever and we were way out ahead in our sector as measured by independent analysts (e.g., Dell'Oro Group), so investors could not understand why terms were coming in so low. In order to get investors to accept new funds at market terms I had to get them to understand that in a post bubble asset price deflation, "We cannot grow the company as fast as the market price for similar companies is falling." What if there is no one at Citi to explain the dynamic of the collapsing asset bubble, of which they are now the center? What if they believe that "the worst is behind them" instead of in front of them? If that is their thinking, then this may be "the kitchen sink" to the best of their understanding but a bathtub and then a swimming pool are yet to come because, as I have warned: The problems are caused by falling loan collateral values, and housing price depreciation has not yet started in earnest. All the price depreciation to date has occurred in the absence of rising unemployment. Now unemployment is rising and the real housing debacle begins.Comment
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