CITIGROUP IS READY TO GO BELLY-UP!
Citigroup posted weaker-than-expected third-quarter earnings on Tuesday as weak bond market trading volume hurt revenue at the No. 3 U.S. bank and across Wall Street.
Citigroup's bond trading revenue dropped 26 percent, or $956 million, excluding an accounting adjustment, contributing to earnings that missed analysts' forecasts.
Citibank is playing a very dirty game against its customers in Greece. The bank makes its customers sign that their CDs will be automatically be renewed without their approval. Then the bank renews the CDs at the infinitesimal rate of 0.1%!
But getting just one thousandth interest rate on CDs is robbery, pure and simple. Citibank officers at the Paleo Faliro branch declare they have a right to do this scheme, because their customers do not care about interest rates, but the prestige of dealing with the Citibank!
Prestige of dealing with Citibank is a joke, as Citibank has lost its good will. Citigroup suffered huge losses during the global financial crisis of 2008 and was rescued in a massive stimulus package by the U.S. government, but this time around the government cannot rescue it again.
Citi's efforts to control costs in the third quarter is the most positive part of the earnings, which were also marked by top-line weakness in retail banking. Similar moves could be imminent at other banks, especially as Wall Street bonus season - typically a huge part of their budgets - approaches.
Obviously, the top-line growth measures are tough to come by in this environment, and the one lever management is able to pull is on the expense side.
In last year's third quarter Citigroup took a pretax charge of $4.7 billion related to selling its Smith Barney brokerage business, a charge that ended up costing Vikram Pandit, then the bank's chief executive, his job.
Pandit's successor, Michael Corbat, has struggled to improve Citigroup fortunes in an environment where client business is tepid and new regulations are raising banks' expenses.
Corbat thinks business conditions would remain uneven through the rest of the year. Corbat says: While many of the factors which influence our revenues are not within our full control, we certainly can control our costs, and I am pleased with our expense discipline and improved efficiency year-to-date.
The bank's expenses fell nearly $500 million from the second quarter to $11.7 billion as performance-based compensation and transaction costs fell, partly reflecting a weak revenue environment, Chief Financial Officer John Gerspach told analysts.
The lender, which has said it was aiming to reduce costs by $1.2 billion annually, said on Tuesday it plans to cut areas like marketing expenses in the fourth quarter. Investors said that from the outside, it is hard to evaluate how the bank's cost-cutting is affecting its daily operations.
Everyone knows credit is getting better and the economy will be what it is, and the question is what can banks do on the cost side. All banks are doing a lot on that front, including Citigroup, but it's hard to see from the outside what is happening. There's a dumpster in the driveway, but all the activity is in the house, and you can't tell what's happening inside.
Customer activity at Citi and other banks fell in the third quarter after the Federal Reserve refrained from changing its bond buying program, a decision that took investors by surprise and led many to take a wait-and-see attitude until there is a clearer time frame for the end of the central bank's economic stimulus program.
The third quarter is typically a slow one for bond trading, and this was exacerbated by the Fed announcement, according to analysts. Under generally accepted accounting principles, Citigroup's net income rose to $3.23 billion, or $1.00 per share, from $468 million, or 15 cents per share, a year earlier.
Excluding the Smith Barney charge, as well as the impact of tax benefits and changes in the value of Citigroup debts and those of trading partners, third-quarter earnings slipped to $3.26 billion, or $1.02 per share, from $3.27 billion, or $1.06 per share, a year earlier. On that basis, revenue fell 5 percent to $18.22 billion.
Now Citibank is in big trouble again, playing dirty schemes, such as the infinitesimal 0.1% on CDs. Citigroup is ready to go belly up. A bank cannot survive by robbing its customers.
A securities arbitration panel has ruled that Citigroup must pay $3.1 million to a customer steered to invest in a politician's real estate developments that went broke.
Nasirdin Madhany and his wife, Zeenat Madhany, of Orlando, Florida, filed the case, reporting negligence, fraud, and other Citibank misdeeds involving millions of dollars in stupid real estate investments just to generate commissions for Citibank.
We are thrilled for the Madhanys. They worked very hard for their retirement. It was a just result because a criminal bank must be held responsible when it robs its customers. Citibank has a consistent track record of defrauding its customers, but its days of operation are very limited. It will be a deja vu of Lehman Brothers bankruptcy, with Citibank officers carrying their belongings in cardboard cases!
Sherry Hunt, a former Citi employee, took Citi to court for fraud—and won $31 million. Citibank was buying mortgages from outside lenders with doctored tax forms, phony appraisals and missing signatures, she says. It was Hunt’s job to identify these defects, and she did, in regular reports to her bosses. Executives buried Hunt’s findings before, during, and after the financial crisis, and even into 2012.
The government requires lenders to certify that insured loans meet FHA standards. Citibank flouted those standards. Citibank passed along subpar loans to the FHA, making substantial profits through the sale and securitization of FHA-backed insured mortgages while it wrongfully endorsed mortgages that were not eligible.
Citigroup was fined $75 million for misleading investors over subprime assets. Charges laid by the Securities and Exchange Commission accuse Citigroup of repeatedly making misleading statements and improper disclosures in its quarterly earnings releases during 2007. Citigroup claimed its exposure to high-risk sub-prime mortgages was no more than $13 billion when in fact it was more than $50 billion.
Citigroup agreed to pay $590 million over claims that it deceived its customers by hiding the extent of its dealings in toxic subprime debt.
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