On Thursday morning, Citigroup (NYSE: C) announced that it is going to lower the number of U.S. retail outlets, limiting the banks to six major metropolitan areas. The Wall Street Journal reports that the bank will also limit its lending mainly to wealthy customers. Citigroup chose to take this step in order to control the amount of its consumer lending, limiting its transactions to credit cards and jumbo mortgages. According to the report, Citi will release its plans in October, when we should learn that the bank will be a presence mainly in New York, Washington D.C., Miami, Chicago, San Francisco, and Los Angeles. That said, it turns out the plan could be contingent upon approval from the U.S. Government. The report notes that some Citi executives are concerned the government may not issue approval.
This move is part of Citi's plan to work "smaller-but-smarter," which could be a boon to the bank. Think about it, limiting lending to credit cards and wealthy customers should help the bank make money -- that is, unless the credit card customers default. The company will sell its branches in other cities, which should help recoup some of the losses it has suffered during the financial meltdown.
The question is, can the stock return to its past glory? With the stock wallowing in the $5 region, I think it may take quite a bit of time before the shares reach levels last seen in 2007. With the equity's 50-week moving average looming as potential resistance, the road higher is going to be rather bumpy. I would exercise caution when dealing with C, it is going to take patience in order to realize profits.
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Reader Comments (Page 1 of 1)
9-24-2009 @ 9:09AM
al said...
C is still brainless and clueless, a new strategy my butt !!
C right now is upgrading ALL OF THEIR BRANCHES with new technology, ATMs, PCs, etc.
Why would anyone(that is a thinking person) invest hundreds of millions of dollars in branches that you are going to close/sell in the near future.
All they are accomplishing is increasing their fixed asset base, AND making the break-even price of these unwanted branches even higher. If they can't sell these outlets, the write-off will be very ugly.
Yeah, right, C has a strategy, IT'S CALLED THEY KNOW HOW TO LOSE MONEY BETTER THAN ANYONE !!!!!!!