Citigroup Shares Down 5% On Shock Revelation
by Stewart Douglas
Story link: Citigroup Shares Down 5% On Shock Revelation
Troubled investment bank Citigroup saw further sell-offs in its shares over the course of trading today as a result of a shocking announcement that the group still maintained in excess of $50 billion worth of exposure to the sub-prime market to be written down at some point in the future.
Additionally investors have been phased in recent days by the departure of executive Chuck Prince and a reshuffle within the senior ranks at the group over the latter part of this week. As a result share trading this morning fell as low as 5.0% less than their opening value, underlining the lack of confidence in the bank at present on the open markets.
The comments from the Citi management as to the reasoning and cause of its rising sub-prime exposure seemed to do little to inspire confidence in shares, particularly now with the threat of further write downs impacting upon profit figures in the near future.
The revelation that the bank was still exposed to $55 billion came in stark contrast to its previous report, which indicated that its exposure accounted only for a further $13 billion with a view to write downs in the near future.
Some market analysts have described the situation as ‘a legal minefield’ with increasing likelihood that a ream of law suits will be filed in connection with the circumstances, particularly with investors feeling aggrieved as the significant underestimation in debt exposure last time round.
Citi have today maintained that whilst this may be disappointing for the company it was committed to providing investors with their promised return whilst enabling organic growth in the overall size of its operation.
Whilst it was suggested that the company still enjoyed free cash flow and strong asset infrastructures, a spokesperson from Deutsche Bank today described the news as ‘unsettling’, particularly in light of the current trading climate.
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