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Is Citibank In Trouble?

Is Citibank In Trouble?

Many depositors across the country find their heads filled with fear. And worry!

Lately all we can read about these days are banks failing everywhere! Are we in a financial crisis? Now some worry Will Bank of America Collapse? And many others worry whether or not there is a Hawaii Bank Run? And of course, many others worry about the more local establishments. Will First Republic Bank Fail ? Is my money Safe in Schwab?

Moreover, if one takes a look at the stock price Citibank faces trouble. However, they are awash in cash and liquidity. And as well know, if we keep less than $250,000 in one account, we have the backing of the FDIC! See for details: FDIC insurance

Let’s take a look at the broader sector!

Below we have a chart showing unrealized depreciation on Hold to Maturity Securities (HTM) for top 100 banks versus equity. 

These unrealized losses are NOT reflected in profits or a deduct to equity via Other Comprehensive Income (OCI) – only in the footnotes! Moreover, we don’t find these losses reflected in stress tests or measures of capital adequacy. 

Furthermore a 25 bp (1/4 of 1 percent) increase in rates for a 10-year security causes approximately 2 points in losses (100 par to 98 to reflect yield discount). 

As a result of the above, Citibank looks quite well managed. We have become impressed! Go Citibank!

Moreover, Bank of America brags of endless liquidity and is many times worse off than Citibank.

However, we don’t like the following, a continued growth in loss provisions, see below:

4Q22 C Press Release (citigroup.com)

However, Citibank is not the same bank as it was during the financial crisis. Now, strong leadership represents a new ‘fresh start’ for the bank.

As reported in the Wall Street Journal, Citibank CEO Ms. Jane Fraser; “has already remade the bank.” See the article Jane Fraser Makes Her Big Pitch to Citi Investors – WSJ for more color!

JPMorgan’s Head of Equity Lee Spelman on Active Vs Passive Investing

Citibank, also known as Citigroup, is a global financial institution that provides banking and financial services to customers in over 160 countries.

The bank has a rich and complex history that spans over two centuries, with roots in the United States and a presence across the world.

Originally founded in 1812. As the City Bank of New York by Samuel Osgood, a former United States Postmaster General.

Moreover, the bank initially provided financial services to merchants in New York City. Furthermore, gradually expanded its reach across the United States. In 1863, the City Bank of New York was one of the first banks to receive a national banking charter under the National Banking Act.

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Citibank logo used from 1976 until 1999 in the United States, designed by Dan Friedman from Anspach Grossman Portugal of New York.[36] This logo was gradually replaced worldwide with the current logo in early 2000s, with Argentina and Venezuela being the last countries to use this logo until 2007 and 2010, respectively.…

Throughout the late 19th and early 20th centuries, the bank continued to grow through mergers and acquisitions. In 1894, the bank merged with the National Bank of New York. As a result forming the National City Bank of New York. The bank also expanded its presence overseas, opening branches in London and Shanghai in the early 20th century.

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52 Wall Street, c. 1890
This file is from the Mechanical Curator collectio

In the decades that followed, the National City Bank of New York continued to expand its reach, opening branches in Latin America, Asia, and Europe.

The bank also became involved in the financing of major infrastructure projects, such as the construction of the Panama Canal.

In 1955, the National City Bank of New York changed its name to Citibank, reflecting its global presence and ambitions. Throughout the second half of the 20th century, Citibank continued to grow through mergers and acquisitions. Moreover, acquiring companies such as First National City Corporation, Travelers Group, and Salomon Brothers.

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View of the northeast corner of William and Wall streets. The house to the far right became City Bank of New York’s first home at 38 Wall Street, later renumbered as No.52. (Painting by Archibald Robertson, c. 1798)
Archibald Robertson – http://blog.citigroup.com/2012/01/citi-turns-200.shtml

Citibank has faced a number of challenges and controversies over the years, including accusations of predatory lending practices, involvement in the subprime mortgage crisis, and involvement in money laundering scandals. The bank has also weathered a number of financial crises, including the Great Depression and the 2008 financial crisis.

In conclusion, today, Citibank is one of the largest and most diverse financial institutions in the world, offering a wide range of financial products and services to individuals, businesses, and governments across the globe. Lastly, the bank continues to expand its reach through strategic partnerships and acquisitions, and it remains a major player in the global financial industry.

Citibank.svg
Citibank logo.
Citibank – Own work using: http://www.citibank.com.au/aus/lending/pdf/CardProtect_PDS.pdf

Is Citibank In Trouble?