DETROIT (AP) — Borrowers should accept a new world of tighter, more expensive credit as financial institutions recover from months of bad loans, failed banks and foreclosed homes, Citigroup Inc.'s chief executive said Monday.
During the past few years, "U.S. consumption and credit creation were the two main drivers of growth," Vikram Pandit told a conference of business, economic and government leaders in downtown Detroit. "The world needs new drivers of growth — and a new business model."
Pandit's speech closed the first day of the three-day National Summit, which is expected to draw about 3,000 attendees to Detroit over three days. The goal of the summit is to craft a plan to keep the U.S. competitive in manufacturing, energy, technology and the environment.
He anticipates less credit that is more costly even as financial markets show signs of recovery. He also expects more corporate restructurings across different industries.
Citigroup has been among the most troubled banks throughout the crisis, receiving $45 billion in federal funds. Last month, the government determined that it would need to raise an additional $5.5 billion as a buffer against future losses.
Investors have criticized its board and management for allowing the bank to make big investments in the risky housing market — actions that led to Citigroup reporting billions in losses.
Pandit acknowledged Citigroup has "received much help along the way" and praised "strong government action" for starting to turn things around in the sector. But he said the company has taken many steps to restructure its business, including cutting its expenses by 25 percent and work force by about 20 percent, and lessening its dependence on credit and consumption.
He said some of the credit squeeze within the overall market is due to the "shadow banking system," largely unregulated finance companies that took wholesale funding and packaged it into student loans, credit cards and home mortgages. That system is responsible for nearly half all credit creation during the past five years, he said, and created a "credit gap" as those markets contracted.
Pandit said one new growth driver for U.S. financial markets is Asia, whose sustained growth requires a shift to domestic consumption.
"It creates tremendous export markets for American countries," he said. "We need unfettered access to these consumers and these markets."
Despite the challenges, Pandit said past U.S. economic downturns have created "breakthroughs" in new technologies and innovations, as well as venture capitalists who make investments.
"As we debate policies, we must take care that this model of growth is preserved," he said. "It is America's magic formula, but it is no longer America's secret."
by the associated press
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Showing posts with label Citigroup. Show all posts
Showing posts with label Citigroup. Show all posts
Monday, June 15, 2009
Thursday, May 7, 2009
Bank stress test results leak ahead of report , by a day
WASHINGTON — Government stress tests are expected to show that nearly a dozen of the nation’s largest banks do not have enough money to survive if the economy worsens and will need to raise billions of dollars as a precaution.
Findings of the government’s long-awaited tests of 19 banks leaked out Wednesday, a day ahead of an official announcement.
Investors cheered reports that American Express, JPMorgan Chase and Bank of New York Mellon have enough capital to endure and even pushed up the stocks of those banks that may need more capital.
But the public nature of the banks’ assessments also raised questions among some critics about whether the findings will reflect the banks’ actual conditions or not.
The tests put banks through two scenarios: one that reflected expectations about the current recession and another that envisioned a recession deeper than what analysts are predicting.
Citigroup Inc. will need to raise about $5 billion, according to a government official briefed on the results who spoke on the condition of anonymity because he was not authorized to discuss the matter. Earlier news reports had put that dollar figure closer to $10 billion.
Regions Financial Corp. also will need to raise more money, according to people briefed on the results of that test, as will Bank of America Corp. and Wells Fargo & Co.
Bank of America stock rose Wednesday after reports that the Charlotte, N.C.-based company would need to collect $34 billion in additional capital. The New York Times and Wall Street Journal reported the figure. The Journal cited unidentified people familiar with the situation, while the Times quoted a bank executive.
Stress tests have long been a part of the bank regulation system. They help regulators decide how to supervise banks and help banks decide how to limit their risk.
Those conversations between banks and regulators normally take place behind closed doors.
Tests raise criticism
In recent weeks, the government’s unprecedented decision to publicly release bank stress-test results has fanned speculation, with analysts predicting the findings and investors staking out trading positions.
Critics are concerned that all the attention could make the tests much less effective. They say regulators seem so intent on maintaining public confidence in the banks that the results will have to say the banks are basically healthy, though some need to raise more capital.
Representatives for American Express Co., JPMorgan Chase & Co., Bank of New York Mellon Corp., Citigroup and Regions Financial would not comment on the tests.
The remaining stress-tested banks are: Goldman Sachs Group Inc., Morgan Stanley, MetLife Inc., PNC Financial Services Group Inc., U.S. Bancorp, GMAC, SunTrust Banks Inc., State Street Corp., Capital One Financial Corp., BB&T Corp., Regions Financial Corp., Fifth Third Bancorp and Keycorp.
Findings of the government’s long-awaited tests of 19 banks leaked out Wednesday, a day ahead of an official announcement.
Investors cheered reports that American Express, JPMorgan Chase and Bank of New York Mellon have enough capital to endure and even pushed up the stocks of those banks that may need more capital.
But the public nature of the banks’ assessments also raised questions among some critics about whether the findings will reflect the banks’ actual conditions or not.
The tests put banks through two scenarios: one that reflected expectations about the current recession and another that envisioned a recession deeper than what analysts are predicting.
Citigroup Inc. will need to raise about $5 billion, according to a government official briefed on the results who spoke on the condition of anonymity because he was not authorized to discuss the matter. Earlier news reports had put that dollar figure closer to $10 billion.
Regions Financial Corp. also will need to raise more money, according to people briefed on the results of that test, as will Bank of America Corp. and Wells Fargo & Co.
Bank of America stock rose Wednesday after reports that the Charlotte, N.C.-based company would need to collect $34 billion in additional capital. The New York Times and Wall Street Journal reported the figure. The Journal cited unidentified people familiar with the situation, while the Times quoted a bank executive.
Stress tests have long been a part of the bank regulation system. They help regulators decide how to supervise banks and help banks decide how to limit their risk.
Those conversations between banks and regulators normally take place behind closed doors.
Tests raise criticism
In recent weeks, the government’s unprecedented decision to publicly release bank stress-test results has fanned speculation, with analysts predicting the findings and investors staking out trading positions.
Critics are concerned that all the attention could make the tests much less effective. They say regulators seem so intent on maintaining public confidence in the banks that the results will have to say the banks are basically healthy, though some need to raise more capital.
Representatives for American Express Co., JPMorgan Chase & Co., Bank of New York Mellon Corp., Citigroup and Regions Financial would not comment on the tests.
The remaining stress-tested banks are: Goldman Sachs Group Inc., Morgan Stanley, MetLife Inc., PNC Financial Services Group Inc., U.S. Bancorp, GMAC, SunTrust Banks Inc., State Street Corp., Capital One Financial Corp., BB&T Corp., Regions Financial Corp., Fifth Third Bancorp and Keycorp.
by the associated press
Saturday, May 2, 2009
Citigroup might need to raise $10 Billion
NEW YORK — Citigroup Inc. may need to raise as much as $10 billion to meet the government’s increased capital standards for banks outlined in its stress tests, according to a report late Friday.
The New York-based bank is currently negotiating with the Federal Reserve and may need less capital if it is able to convince regulators of its financial health, The Wall Street Journal said on its Web site. A Citigroup spokeswoman declined comment on the story.
On Friday, the government postponed its expected release date of the stress test results to Thursday from Monday, as regulators negotiate with banks over the findings.
Last week, Fed officials said all 19 banks that underwent the stress tests will need to keep extra capital on hand beyond what’s now required in case losses continue to climb. That was a signal some banks would have to raise more cash. Initial results indicated that both Citigroup and Bank of America Corp. would be among that group, sources told The Associated Press earlier this week.
Banks will have up to six months to raise money from private sources, Federal Reserve Chairman Ben Bernanke has said. If they can’t, the government would provide aid.
The New York-based bank is currently negotiating with the Federal Reserve and may need less capital if it is able to convince regulators of its financial health, The Wall Street Journal said on its Web site. A Citigroup spokeswoman declined comment on the story.
On Friday, the government postponed its expected release date of the stress test results to Thursday from Monday, as regulators negotiate with banks over the findings.
Last week, Fed officials said all 19 banks that underwent the stress tests will need to keep extra capital on hand beyond what’s now required in case losses continue to climb. That was a signal some banks would have to raise more cash. Initial results indicated that both Citigroup and Bank of America Corp. would be among that group, sources told The Associated Press earlier this week.
Banks will have up to six months to raise money from private sources, Federal Reserve Chairman Ben Bernanke has said. If they can’t, the government would provide aid.
by the associated press
Wednesday, April 22, 2009
Anger Shareholders at CitiGroup Meeting
NEW YORK — Five hours and dozens of angry speakers into Citigroup Inc.’s annual meeting Tuesday, a long line of shareholders still waited at the microphone for their chance to vent.
Everything was fair game — from executive pay to the company’s decision to sponsor the Mets’ new baseball stadium, Citi Field. When Chairman Richard Parsons recognized five departing board members, a cry rose from the audience: "Thank God, you’ve gone!”
Citi, the nation’s third largest bank by assets, was the first major bank to hold its annual meeting since last year’s financial collapse. Its future remains uncertain with the government soon to become its biggest shareholder.
CEO Vikram Pandit tried to appease the group at the New York Hilton hotel, emphasizing to shareholders that Citigroup is not the same company it was just a year ago, when it became clear the bank was buckling under billions of dollars in bad debt.
In his opening remarks, Pandit said four new board members will bring "new eyes” to the bank.
He stressed that the company was embarking on a "new strategy” that includes splitting the bank into two parts.
"Citi is one of the great business opportunities of our age,” Pandit said. He added: "I believe to my core that Citigroup has what it takes to rebound, what it takes to rebuild.”
Many are re-elected
Despite shareholders’ venom, all returning directors and four new ones were elected with at least 70 percent of the vote, according to preliminary results. And while some shareholder proposals came close to passing, preliminary results showed none did. Final results will not be released until May, the bank said.
The new board members are former U.S. Bancorp CEO Jerry Grundhofer, former Bank of Hawaii CEO Michael O’Neill, former Philadelphia Federal Reserve President Anthony Santomero and William S. Thompson Jr., former CEO of bond investment manager Pimco.
While many sharehold-ers have called for change at the board level for years, some say the new nominations don’t go far enough.
Shareholders questioned Citigroup’s credit card underwriting standards and the government’s involvement. Other shareholders called the board "Byzantine,” "communist” and "socialist.”
Shareholder Kenneth Steiner said it is ridiculous that a board composed of CEOs and former CEOs gets a say in Citigroup executives’ compensation while shareholders do not.
"It’s like having the Yankees determine the salary of the Mets.”
by the associated press
Everything was fair game — from executive pay to the company’s decision to sponsor the Mets’ new baseball stadium, Citi Field. When Chairman Richard Parsons recognized five departing board members, a cry rose from the audience: "Thank God, you’ve gone!”
Citi, the nation’s third largest bank by assets, was the first major bank to hold its annual meeting since last year’s financial collapse. Its future remains uncertain with the government soon to become its biggest shareholder.
CEO Vikram Pandit tried to appease the group at the New York Hilton hotel, emphasizing to shareholders that Citigroup is not the same company it was just a year ago, when it became clear the bank was buckling under billions of dollars in bad debt.
In his opening remarks, Pandit said four new board members will bring "new eyes” to the bank.
He stressed that the company was embarking on a "new strategy” that includes splitting the bank into two parts.
"Citi is one of the great business opportunities of our age,” Pandit said. He added: "I believe to my core that Citigroup has what it takes to rebound, what it takes to rebuild.”
Many are re-elected
Despite shareholders’ venom, all returning directors and four new ones were elected with at least 70 percent of the vote, according to preliminary results. And while some shareholder proposals came close to passing, preliminary results showed none did. Final results will not be released until May, the bank said.
The new board members are former U.S. Bancorp CEO Jerry Grundhofer, former Bank of Hawaii CEO Michael O’Neill, former Philadelphia Federal Reserve President Anthony Santomero and William S. Thompson Jr., former CEO of bond investment manager Pimco.
While many sharehold-ers have called for change at the board level for years, some say the new nominations don’t go far enough.
Shareholders questioned Citigroup’s credit card underwriting standards and the government’s involvement. Other shareholders called the board "Byzantine,” "communist” and "socialist.”
Shareholder Kenneth Steiner said it is ridiculous that a board composed of CEOs and former CEOs gets a say in Citigroup executives’ compensation while shareholders do not.
"It’s like having the Yankees determine the salary of the Mets.”
by the associated press
Tuesday, April 7, 2009
Title Change at CitIGroup
Citigroup Inc , on Monday took the " interim " out of Mike Corbat's title as cheif of Citi Holdings , the Business that includes the riskier assets at the big banking company . Corbat had been overseeing the unit sincc Citigroup announed it was spliting int's operations into two parts in January .
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