Nomura Securities Maintains a 'Buy' on Citi (C); MSSB Process Likely Headed to Arbitration

Nomura Securities maintains a 'Buy' on Citi (NYSE: C) price target of $41.00.

Analyst, Glenn Schorr, said, "Citi released details regarding the initial bid for the 14% share of the MSSB joint venture – likely a securities laws thing, given that the very wide gap to their valuation would potentially result in a big noncash charge for Citi in 3Q (Citi’s value for the whole thing is ~$22bn, while we think MS bid off a value of ~$9bn). We understand the idea of bidding low to negotiate. But in the end, we think this goes to arbitration and they hammer a price in between leading to a P&L charge and increase in B3 ratio for Citi, and no material impact to MS on the capital front as they already incur the full weight of MSSB. We think this heads to arbitration at the end of August and expect the ultimate outcome of the process to be released in early September."

For an analyst ratings summary and ratings history on Citi click here. For more ratings news on Citi click here.

Shares of Citi closed at $26.59 yesterday.

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