Continue reading Primerica IPO: Citigroup unwinds its far-flung empire

Primerica IPO: Citigroup unwinds its far-flung empire originally appeared on BloggingStocks on Fri, 06 Nov 2009 11:00:00 EST. Please see our terms for use of feeds.

ClusterStock has put together a countdown of the biggest financial losers of 2008.

The results aren't too surprising: Executives at big banks with large stock holdings lost huge chunks of their fortunes. Former Citigroup (NYSE: C) head Sandy Weill saw his net worth plunge from $1.8 billion to $1.3 billion, and former Lehman head Richard Fuld lost about $1 billion.

But before you feel too bad, it's important to remember that these guys were playing with the house's money. As CEOs, they received huge stock and option grants as part of their compensation -- it's not like they ever paid cash for any of their shares, with the exception of the occasional token insider buying. No matter how you look at it, these guys were paid enormous amounts of money while destroying other people's wealth.

Continue reading Wall Street's biggest losers of 2008

Wall Street's biggest losers of 2008 originally appeared on BloggingStocks on Sat, 07 Feb 2009 13:30:00 EST. Please see our terms for use of feeds.

Continue reading Sandy Weill gives up Citigroup corporate jet

Sandy Weill gives up Citigroup corporate jet originally appeared on BloggingStocks on Mon, 02 Feb 2009 17:45:00 EST. Please see our terms for use of feeds.

Citigroup (NYSE: C) is the result of grand ambitions of a Wall Street dealmaker, Sandy Weill. But, of course, this week things came to an end as the company announced a dramatic dismantling of the global financial empire.

The bank's CEO, Vikram Pandit, has little choice. After all, Citigroup's stock continues to plunge, with the market cap at a lowly $19 billion.

But the new strategy has a big problem: In light of the continued dangers in the banking system -- such as Bank of America's (NYSE: BAC) horrible experience with its purchase of Merrill Lynch -- it's going to be tough to find willing buyers of Citigroup's far-flung assets. The asset sales are likely to be prolonged and priced at distressed levels.

Interestingly enough, despite the urgency for change, Citigroup has indicated that certain assets are off-limits, such as the Nikko Cordial Securities unit (the #3 brokerage operation in Japan) and Grupo Financiero Banamex SA (the banking platform in Mexico). This was the situation just three days ago.

No doubt, these assets are key for the growth of Citigroup. Right?

Continue reading Citigroup now wants to dump Nikko (at least for now)

Citigroup now wants to dump Nikko (at least for now) originally appeared on BloggingStocks on Sun, 18 Jan 2009 11:40:00 EST. Please see our terms for use of feeds.

Last month, I posted on 2008's eight worst ideas. At the top of my list was deregulation. Robert Rubin, who spent a decade as a director of Citigroup (NYSE: C) and is now retiring, is partly responsible for one very important act of deregulation -- the repeal of Glass-Steagall which separated investment and commercial banking. (It was former Citi CEO Sandy Weill's 1998 merger of his Travelers with Citi that spurred Glass-Steagall's repeal in the 1999 passage of the Gramm-Leach-Bliley Act which allowed commercial and investment banks to own each other.)

And by bringing down that barrier -- established in the wake of the stock market manipulations of the 1920s enabled by commercial banks that made margin loans to trade stocks -- the U.S. helped usher in the current financial catastrophe. Now the government is gradually reimposing Glass-Steagall -- in effect, if not in law.

Rubin was well rewarded for his decade of "service" to Citi -- taking in $126 million and being paid as an employee while claiming to be a mere advisor. But for that measly sum, Rubin's reputation -- which was at its zenith following his tenure as Treasury Secretary in the 1990s -- is shredded. It probably didn't help that since he joined Citi's board in October 1999, its stock has fallen 82% -- destroying $164 billion in stock market value. Meanwhile, the empire that Weill ushered in -- based on the idea that people wanted to buy all their financial services from one provider -- is being dismantled.

Continue reading As Rubin departs Citi, deregulation gets a spike through its heart

As Rubin departs Citi, deregulation gets a spike through its heart originally appeared on BloggingStocks on Sat, 10 Jan 2009 08:40:00 EST. Please see our terms for use of feeds.

A lot of investors think that the house Sandy Weill built has too many rooms. Citigroup (NYSE: C) operates financial divisions for everything from banking in South America to commodities trading in New York. Many shareholder think that some of these businesses would be better off on their own and that Citi could sell them for nice premiums.

Current management at the big financial company obviously thinks keeping Citi together is a good idea. So far, there has been no move to spin out, or auction off, any of the firm's really large divisions.

Management's reluctance to change the face of Citi has not kept the American Federation of State, County and Municipal Employees -- a big U.S. union -- from starting a push to pull the financial company apart. According to the FT, "In a letter sent on Friday to Sir Win Bischoff, Citi chairman, Gerald McEntee, Afscme's president, urged Citi's board to "restore shareholder value that is currently trapped in the sprawling financial supermarket approach.""

The board and management at Citi will ignore the plea, and that is too bad. Even though Wall Street was glad that the company's last set of earnings were not worse, they were certainly bad enough. Some analysts see Citi losing money for several more quarters as it continues to write down investments that have been damaged by the credit crisis.

It is hard to defend keeping assets like Smith Barney when they are likely to fetch a large enough sum to shore up Citi's balance sheet. That logic has escaped the powers that run Weill's creation, which is too bad for anyone who has watched the value of Citi drop by more than 50% in the last year.

Douglas A. McIntyre is an editor at 247wallst.com.

A bit more pressure to break-up Citigroup originally appeared on BloggingStocks on Mon, 21 Jul 2008 09:35:00 EST. Please see our terms for use of feeds.

Citigroup (NYSE: C) may fire as many as 18,000 more people this year. In the second quarter, it is faced with write-offs as high as $8 billion. According to The Times, "Although Citi has raised more than $50 billion in new capital to repair its balance sheet, analysts believe it will need even more new cash to see it through the financial crisis."

Based on Citi's current market cap of $90 billion and its stock price, just above $16, raising another $10 billion could push the stock as low as $10.

One of the ironies of this is that the man who created the financial services companies through a series of mergers, Sandy Weill, still sits on the Forbes 400 list with a $1.3 billion net worth. Too bad he can't send each shareholder a small check.

Weill is an example of why some part of a CEO's pay should not be held in escrow until a decade after he retires. At least then, they might give some thought to what their actions could cause a few years down the road.

Douglas A. McIntyre is an editor at 247wallst.com.

Citigroup (C) may need to raise more money, but Sandy Weill is still rich originally appeared on BloggingStocks on Sun, 06 Jul 2008 05:27:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• In what may trump a GBP1.6B bid from a private-equity led consortium consisting of The Goldman Sachs Group Inc's (NYSE: GS) Goldman Sachs Capital Partners, Candover Investment (OTC: CDRIF), and Alpinvest, Expro International Group (OTC: EXPRF) said it received a GBP1.71B bid proposal from Halliburton Company (NYSE: HAL), the Wall Street Journal reported. Expro said the proposal "does not amount to a firm intention to make an offer and is subject to certain preconditions."
• The Wall Street Journal also reported that the oil industry and some U.S. lawmakers are looking to end long-standing bans on domestic drilling put in place to protect areas that are environmentally-sensitive, fueled by concerns about global energy.
• In an interview with the Financial Times, Citigroup Incorporated's (NYSE: C) former chairman and CEO Sandy Weill acknowledged that choosing Chuck Prince as his successor in 2003 turned out not to be the "right thing" for the company and was flawed. Instead of handing the job to Prince, Weill said the board should have fostered competition among the bank's top managers for the job.

• According to the Washington Post, MedImmune, a unit of drug giant AstraZeneca Plc (NYSE: AZN),settled with Genentech Inc (NYSE: DNA) a lawsuit over a patented component of its best-selling drug Synagis, which is aimed at preventing respiratory infections in infants. No details of the settlement were provided.

Newspaper wrap-up: Former Citigroup CEO admits flaw in succession plan originally appeared on BloggingStocks on Fri, 23 May 2008 08:00:00 EST. Please see our terms for use of feeds.

Continue reading Cramer on BloggingStocks: Spitzer's men couldn't put it back together again

Cramer on BloggingStocks: Spitzer's men couldn't put it back together again originally appeared on BloggingStocks on Tue, 12 Feb 2008 08:35:00 EST. Please see our terms for use of feeds.

BusinessWeek interviewed former Citigroup Inc. (NYSE: C) CEO Sandy Weill about a range of topics regarding Citi's performance and prospects as well as its efforts to raise capital. He defends the complex business structure he created and declines to reveal how much he invested in its latest round.

After reading the interview, I get the impression that he still wields tremendous power over Citigroup and that it could be stuck with its current corporate strategy until Weill departs from the scene. His defense of the current corporate strategy is not compelling, at least not to me. Arguing against breaking up Citi, he says, "One of the advantages of the company is that it is in 100-plus different countries and has diversity in income streams."

He continued by defending the merits of this diversification. "Since the merger of Citi and Travelers in 1998, we've had a big corporate business and we've had a big consumer business. We've watched times when the consumer business did poorly and the corporate business did very well. Now, we're watching a time where the global consumer business has done well, whereas the U.S. consumer business has had to add to loan loss reserves. Over time, they balance out."

Continue reading Sandy Weill spins Citi

Sandy Weill spins Citi originally appeared on BloggingStocks on Wed, 16 Jan 2008 12:45:00 EST. Please see our terms for use of feeds.

The New York Times raises an important question facing Citigroup (NYSE: C) and Merrill Lynch (NYSE: MER) -- is the financial supermarket -- an idea pushed by former Citigroup CEO Sandy Weill -- an idea whose time is past? I think it's time to kill this failed concept -- it's bad for customers, employees, and shareholders.

Twenty-five years ago, I won a competition at the consulting firm where I worked to advise an insurance company about how it should respond to the financial supermarket idea. Back then, Sandy Weill had taken his brokerage firm -- Shearson -- and merged it with Lehman Brothers (NYSE: LEH) and ultimately American Express Co. (NYSE: AXP) to create a company where someone could get all their personal financial needs taken care of under one roof. My job was to find other companies that this insurance company could buy to implement the financial supermarket concept.

But the financial supermarket is a non-starter from the customer's standpoint. It doesn't even work inside the institution where it's housed. After Sandy Weill got kicked out of American Express, he tried to rebuild the concept from scratch -- starting with Commercial Credit and extending to Travelers Co. (NYSE: TRV) and ultimately merging it all together into Citigroup. This is all well described in Amey Stone's King of Capital.

Continue reading Memo to Citigroup and Merrill: It's time to kill the financial supermarket

Memo to Citigroup and Merrill: It's time to kill the financial supermarket originally appeared on BloggingStocks on Mon, 05 Nov 2007 10:22:00 EST. Please see our terms for use of feeds.

Shallow management at Citi these days originally appeared on BloggingStocks on Wed, 11 Apr 2007 13:43:00 EST. Please see our terms for use of feeds.