Investors are quickly losing faith in Citigroup (C). Shares of the company, once the largest and mightiest U.S. bank by assets and market value, have fallen 66% in November, and finished down 1.85, to 4.55, on Nov. 20. The last time the shares traded that low was 14 years ago. While the stock sank, the price soared on its credit default swaps, which measure the cost of insuring Citi’s debt—another worrisome sign. The market woes are raising speculation that some sort of government intervention or major outside investment may be necessary.
Says William Fitzpatrick, an equity analyst at Optique Capital Management: “Clearly the solvency issue is back on the table.”
Citi is doing its best to calm investors, reiterating that the bank isn’t in critical condition. Citi issued a formal statement on Thursday, Nov. 20, saying that it “has a very strong capital and liquidity position and a unique global franchise. We are focused on executing our strategy, including our targeted expense and legacy asset reductions, and we believe the benefits will be seen over time.”
Indeed, Citi has bolstered the capital on its books in recent weeks. Less than two weeks ago, the bank—which is now fifth-largest in terms of assets—received $25 billion from the federal government, one of nine commitments made to large banks for a piece of the $700 billion bailout. Citi also received new assurances from Saudi Prince Alwaleed bin Talal, once the bank’s largest shareholder, who said publicly he intended to increase his stake by $350 million, to 5%, from less than 4%, and pledged “full and complete support to Citi management.”
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