Top 15 For 2008 (No. 11): Citigroup (C) Collapses Under Its Own Weight
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StreetInsider.com has put together its 'Top 15 For 2008' which chronicles our view of the most significant news on Wall Street during the tumultuous year.
Number 11: Citigroup (NYSE: C) Collapses Under Its Own Weight
The credit meltdown proved too big for even mega-bank Citigroup (NYSE: C) to navigate and in November the U.S. Treasury and the Federal Reserve Board stepped in to bailout the once venerable company.
With new CEO Vikram Pandit in place at the beginning of the year, Citigroup was hoping for a reversal of their fortunes in 2008, but its problems were just beginning. Citi which lent aggressively during the boom-time, was watching its balance sheet crumble due to billion and billions in asset write-downs and loan losses.
The losses coming out of the company were massive and adding up quickly, putting pressure on its capital ratios and the stock. In January, the company reported a Q4 loss of $1.99 per share. In April, it was another $1.02 per share loss for Q1. In July, the Q2 loss was reported at $0.49 per share. In October, the Q3 loss was reported at $0.60 per share.
By November, with the financial world in complete meltdown, Citi was forced to act and held a town hall meeting on November 17th to stop the bleeding and instill confidence from customers and employees. At the meeting, Citi said it would cut 50,000 jobs and reduce expenses by 20%. The meeting did little to boost confidence and before long the stock was in absolute free-fall. On Wednesday November 19th the stock plunged 23%, on the Thursday the 20th it was down another 26% and on Friday the 21st another 20%. By the end of the week Citi's stock was trading in the $3 range and the government was forced to step-in.
At the beginning of 2008 it would have been incomprehendable to image that Citigroup would be on the brink of bankruptcy, but that is exactly what happened. On the weekend of November 22nd the U.S. government stepped-in and on Monday November 24th the U.S. Treasury, the Federal Reserve Board, and the Federal Deposit Insurance Corp announced a $40 billion rescue package for the company.
Number 11: Citigroup (NYSE: C) Collapses Under Its Own Weight
The credit meltdown proved too big for even mega-bank Citigroup (NYSE: C) to navigate and in November the U.S. Treasury and the Federal Reserve Board stepped in to bailout the once venerable company.
With new CEO Vikram Pandit in place at the beginning of the year, Citigroup was hoping for a reversal of their fortunes in 2008, but its problems were just beginning. Citi which lent aggressively during the boom-time, was watching its balance sheet crumble due to billion and billions in asset write-downs and loan losses.
The losses coming out of the company were massive and adding up quickly, putting pressure on its capital ratios and the stock. In January, the company reported a Q4 loss of $1.99 per share. In April, it was another $1.02 per share loss for Q1. In July, the Q2 loss was reported at $0.49 per share. In October, the Q3 loss was reported at $0.60 per share.
By November, with the financial world in complete meltdown, Citi was forced to act and held a town hall meeting on November 17th to stop the bleeding and instill confidence from customers and employees. At the meeting, Citi said it would cut 50,000 jobs and reduce expenses by 20%. The meeting did little to boost confidence and before long the stock was in absolute free-fall. On Wednesday November 19th the stock plunged 23%, on the Thursday the 20th it was down another 26% and on Friday the 21st another 20%. By the end of the week Citi's stock was trading in the $3 range and the government was forced to step-in.
At the beginning of 2008 it would have been incomprehendable to image that Citigroup would be on the brink of bankruptcy, but that is exactly what happened. On the weekend of November 22nd the U.S. government stepped-in and on Monday November 24th the U.S. Treasury, the Federal Reserve Board, and the Federal Deposit Insurance Corp announced a $40 billion rescue package for the company.
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