Citigroup Inc.C

Morningstar Rating

Stock Research and Analysis

by Jaime Peters, CFA, CPA

Years of binging on growth and failing to properly integrate acquisitions have finally caught up with Citigroup. The credit crunch is exposing the reckless risk-taking and poor controls the company hid during the boom times. A struggling management Read more

Bulls Say

Despite rough times in its history, Citigroup has always found ways to make it through. Returns on equity have averaged 15% over the past 20 years.

Citi's Tier 1 common ratio--adjusting for all the TARP-related actions--was 9% at Sept. 30, creating a nice cushion to absorb future losses.

By repaying the $20 billion of government TARP trust preferreds and canceling the loss share agreement on toxic assets, Citigroup will no longer be under the restrictions of companies receiving extraordinary government aid. Read more

Bears Say

Consumer- and housing-related credit has been the root cause of most of Citigroup's problems.

Citigroup's lack of a signed, definitive merger agreement with Wachovia allowed Wells Fargo WFC to sneak in and steal a potentially positive deal away from the deposit-hungry company.

Citigroup's desperation to shore up its capital base has led it to sell its profitable and wide-moat Smith Barney division in a complex joint-venture arrangement with Morgan Stanley. Read more

Strategy

Citigroup is trying to rationalize its business. The company divided itself into a good bank and a bad bank. Citigroup is trying to sell or run off the assets in its Citi Holdings division. The Citicorp Read more

Management

Citigroup's management and board of directors have changed rapidly this year. The company is on its third CFO of the year, seven of its 17 board members are new, and it has replaced its chairman of the board. Former Time Warner TWX CEO and chairman Read more

Profile

Citigroup is one of the world's largest and most diverse financial services companies. It is at or near the top of virtually all its product categories, including credit Read more

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