Citigroup to pay 7 billion...

You knew it was coming. Although several other banks got bigger haircuts than this, Citi has agreed to pay USD 7 billion in the their mortgage settlement. As is usual in these types of settlements it's more than they wanted to pay and less than the Justice Department wanted.

Dick Bove on Citigroup

"Sell, sell, sell..." is his message. Watch him here as he calls the Mexican situation a "horror show." He is of course referring to the lack of controls in Banamex which allowed 400 million U.S. dollars to essentially walk out the door. Also in the news today, the Fed rejected Citi's request to raise its dividend stating that the Fed's latest stress test shows the bank needs to shore up its plan to weather the next economic downturn.

Citi settles with bondholders

Citi will pay 730 million U.S. dollars to settle a class action suit by bondholders stemming from the financial crisis. The bondholders claimed that Citi misled them by misrepresenting its exposure to mortgage-backed assets as well as understating losses on loans. Citigroup denies the allegation but is settling to put the lawsuit behind it.

Uncle Vik done at Citi

Huge news from the financial sector. Citigroup's Vikram Pandit has stepped down as CEO. His sidekick, President and COO John Havens has also resigned. Havens came with Vikram from Old Lane and when you link your star so closely to one individual, when that individual goes, typically so do you. There had been rumblings for quite a while now that it was time for a change, and the change has now become a reality. Is this the reason for his exit? The article also states that some of Citi's staff heard about Mr. Pandit's departure from the media before they received the internal announcement.Citigroup's board of directors has appointed Michael Corbat, who headed the bank's operations in Europe, the Middle East, and Africa, as the bank's new CEO. Let us hope that this leadership change moves the needle positively in terms of shareholder value.

Citi dealt another blow

Specifically Citi's senior management has been dealt the blow that is. The whole theory behind the concept of pay for performance is you have to perform well in order to be paid well. Yesterday, at its annual meeting, shareholders voted no to the pay packages executives at Citi are extending themselves. Citi has not performed well since the 2008 financial meltdown (it really wasn't performing that great before it either) and shareholders do not believe that the management of the firm should be rewarded for the underwhelming results the company has repeatedly posted quarter after quarter.

It has been a long time since shareholders have seen any significant dividend checks and they are not happy. Uncle Vik was trying to change that but got shot down by the Fed when Citi failed the most recent stress test. Citi reported its first quarter profits for 2012 were down 2.3%. These results were better than analysts' expectations, but the vote yesterday is a signal to Citi's management that better performance is expected.

Citigroup fails stress test

Of the 19 banks that were subjected to the stress test to judge whether they were capitalized enough to withstand another financial downturn in the economy, Citigroup was one of the 4 that did not pass muster. As a consequence the Federal Reserve will not allow Citi at this time to increase the dividend it pays to shareholders. Another blow for Uncle Vik.

Citi charges its customers twice

In a desperate attempt to increase revenues...(just kidding). A Citi bill-pay app is the culprit behind some customers being charged twice the amount they should have been for the electronic bill paying service. Citi has traced the error to an iPad application and is remedying the mistake.

Citi Mortgage Backed Securities settlement rejected by judge

In an interesting development, a judge has rejected Citi's proposed settlement with the SEC for $285 million dollars, saying he does not have enough facts to approve it. Many financial institutions have a history of settling with the SEC over alleged wrongdoing without admission or denial of liability. It is akin to paying a substantial sum of money to sweep the finding under the rug as if it never happened. Well, this judge is having none of that and as of now is sending the case to trial.

In its complaint against Citigroup, the SEC said the bank misled investors by selling assets in a $1 billion fund that they projected would lose money while at the same time the bank took a short position in some of those same underlying assets. According to the SEC, investors lost an amount to the tune of $700 million dollars. If this is the case then paying out $258 million seems like a bargain, which is probably one of the reasons the judge didn't go for it.

It's not the first time nor will it be the last that a large financial institution becomes embroiled in some sort of situation resulting from the whole sub-prime mortgage fiasco. This one just happened to run into a judge that doesn't want to let it go away so easily.

Citi hikes fees

Citi joins other bastions of finance such as Bank of America,Wells Fargo, JPMorgan Chase, Sun Trust and Regions Financial in once again hiking fees to consumers. This time around in Citi's case it is upping fees for checking accounts.

Citi says over 360k accounts hacked

Citi announced yesterday that over 360,000 accounts had been compromised by the latest hacking attack it experienced, doubling the amount of accounts it initially said had been affected. The exact number given by Citi to date is 360,083, which according to the article is approximately 1 percent of Citi's North America branded credit card accounts.

Citi criticized for delay

Once again a Citi misstep has the company spinning its defense in terms of the 3 weeks it took to notify customers their accounts had been hacked. The way to deal with these types of events is lightning speed transparency and clear communication to regain the trust of your customers but don't try telling Citi that.

He used to make a dollar...

But that's all over now. Uncle Vik's salary (CEO of Citigroup), which used to be one dollar, now sits at a cool 1.75 million according to a U.S. Securities and Exchange Commission filing, which we all know has its own problems, but as far as I know keeping records of C.E.O.'s salaries isn't one of them.

Uncle Vik at it again

Vikram Pandit has announced a management shakeup at Citi, the main result being his "enforcer" John Havens has been appointed president and chief operating officer of Citigroup. This means Havens will assume the day to day management of the firm and answer directly to Uncle Vik. Other changes include James Forese being appointed chief executive officer of Securities and Banking and Citi Vice Chairman Ned Kelly is to become chairman of the ICG.

This is mainly a re-shuffling of resources already at the executive level. A lot of good talent has left or been sent packing from Citi and Uncle Vik is trying to placate private shareholders now that he is out from under the government's thumb so to speak. Uncle Vik has praised John Havens as one of the principle levers in the turnaround of the firm. My question is, what turnaround? The stock (C) is still hovering around the four and a half dollar mark and I personally have been waiting years for it to go anywhere close to where it once was when Citi was the venerable money making machine of the past.

Contrary to my take, Prince Alaweed of Saudi Arabia, a very prominent Citi private shareholder, praises Pandit for his work thus far.

The call that went awry

A conference call organized by Citigroup which was supposed to quell investors' fears over Ireland's economic woes became an unmitigated disaster when Citi failed to mute the investors' lines. When the investors realized their lines were not muted they proceeded to heckle Ireland's finance minister Brian Lenihan as he attempted to deliver his message. As things got out of control Citigroup officials shut down the line.

Host Philip Brown, head of public sector debt at Citigroup, restarted the call 20 minutes later. Citigroup cited technical difficulties as the culprit. That conference call technology can get pretty tricky at times.

What's wrong with a few Citi shares?

The Treasury is still having a tough time unloading Citi stock. It is now contemplating a share offering instead of stealthily selling it in small quantities on the market to an unsuspecting public. I looked under the cushions in my couch for some spare change and found a few quarters and dimes so perhaps I might buy some. Seriously, the Treasury still owns about 17 percent which is no small stake. Why doesn't Uncle Vik's enterprise look attractive to investors? The last time I looked it was trading at this price.

Trouble in the Citi

Mike Mayo and Uncle Vik are at loggerheads once again with Mayo insisting that Citi should take a writedown, or a loss on some $50 billion of “deferred-tax assets,” or DTAs. NRO is reporting that Uncle Vik is so upset with Mr. Mayo that he has been banned from access to any of Citi's top executives.

Woman says Citi fired her because she was too hot

She is working on a lawsuit and if it is true, Citi just made another ridiculous misstep. At least one thing about the case will be true. She is hot.

It could be as early as today

That the Treasury starts selling is 7.7 billion Citigroup shares, supposedly under a pre-arranged written trading plan. Uncle Vik says he is pleased and that the bank is "positioned for growth." Look for the stock to fall.

Vikram Pandit: Wine Connoisseur

I tend to post about wine from time to time and about Citigroup and its CEO, Vikram Pandit from time to time, but rarely do I get to post on both at the same time. So this post could be considered a double whammy or whatever it is that they call such things when they happen. In an excerpt from Roger Lowenstein's book The End of Wall Street, Uncle Vik and wine figure together prominently. Here is the excerpt...

"The problem of executive pay did not admit to an easy fix. Well into the crisis period, when banks such as Citigroup (C) were operating on federal investment and when Citi's stock was in single digits, Vikram Pandit, the CEO, was observed with a lunch guest at Le Bernardin, one of the top-rated restaurants in New York. Pandit looked discerningly at the wine list, saw nothing by the glass that appealed, and ordered a $350 bottle so that, as he explained, he could savor "a glass of wine worth drinking." Pandit drank just one glass; his friend had none."

Major banks mask risk levels

It seems that hubris continues to fly in our beloved major financial institutions. Large banks, including Citi, have understated the debt levels used to fund securities trades for the past five quarterly periods according to the Fed of New York. The practice, while legal, gives investors a distorted picture of what banks' risk levels really are for the majority of the time. They lower the level right before they report publicly and then raise it back up right after. Did we not learn anything from the "crisis" we just went through? Someone make it stop, please!