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C - Citibank


gordoffh

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Hi Dutchman,

 

I wasn't able to copy and paste your question.

His positions are listed at the bottom of the page, underneath Kevin grants signature.

 

I just thought it was funny, "hey shareholders look at this great idea" then you see it's 1.3 percent.

If citi goes up 30 percent his shareholders will see less than a half of one percent move.

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Hi Dutchman,

 

I wasn't able to copy and paste your question.

His positions are listed at the bottom of the page, underneath Kevin grants signature.

 

I just thought it was funny, "hey shareholders look at this great idea" then you see it's 1.3 percent.

If citi goes up 30 percent his shareholders will see less than a half of one percent move.

 

Is it difficult to believe that someone might not want a larger position, but still thinks it's a good idea?

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I don't understand why Nygren lists Citigroup as attractive and points it out for his shareholders buy only buys 1.3%.

 

Pabrai has a large position in Citi, though I don't know if he has sold any yet. Also David Tepper.

 

Overall I would prefer US focused banks than Citi. It is just too large and every single crisis in the world anywhere hurts it, if you look back at history.

Do you know if the liabilities of Citi's worldwide operations are recourse to Citi parent holding co?

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Q1 Results are out:

http://www.citigroup.com/citi/investor/data/qer114.pdf?ieNocache=621

They beat on top and bottom line.

The argument that the TBV is overstated because a lot of it is DTAs and their present value is only a percentage of what they are holds up.

But at the same time agreeing with the statement above and given that most of the DTAs are not considered as capital for the core tier I in Basel III, it means that they are going to increase their relevant capital levels at a higher pace that their earnings alone are showing since the usage of the DTAs every quarter will  show in their capital levels.

That would mean that in the future (when they are approved for to return capital to the shareholders) all things equal they should be able to return a higher percentage of their earnings to shareholders than any other big bank.

Their capital levels are already very strong.

Do most people following citi agree with this view?

 

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To elaborate more on the post above their estimated Total Basel III Tier 1 Common Capital has increased by 6,332 million in the quarter which is over 2 dollars per share(The difference between net earnings and increse in capital looks like more than you would expect in a normal quarter), . This sounds like a lot, they got 500 million extra from the amortization of intanglibles and lower goodwill and i would expect them to get an extra 700millions to a billion in the reduction of the DTAs going forward so that should be add back to the amount of capital that the bank could give back going forward. (limited by the new basel III leverage ratio)

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It continues to earn a more than bac (even after excluding all the settlements charge offs) but even after the rally there is about 30 billion difference than bac.

Over the next few years the extra earnings will accrue to the investor from dividends and will mitigate the large market multiple difference from bac.

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Citigroup: small favours

 

 

Earnings have beaten expectations, but there are big hurdles to overcome

 

http://www.ft.com/intl/cms/s/3/d648bb16-c3e8-11e3-b2c3-00144feabdc0.html?siteedition=intl#axzz2ysqQDCuL

 

 

 

 

 

Thank goodness for small favours. Citigroup on Monday reported first quarter revenue and earnings that beat analysts’ expectations. This is a welcome relief for shareholders who have been smarting over some disturbing developments at the bank so far this year. First, there were fraud allegations at the Mexican unit, Banamex. Then Citigroup’s plans to return more capital to shareholders received a costly and embarrassing veto from the Federal Reserve as part of annual stress tests. A small favour, yes, but big hurdles to overcome.

 

 

 

Citigroup is benefiting as Citi Holdings, a unit that houses its troubled assets from the crisis, becomes an ever-decreasing drag on profitability. On a pre-tax basis, losses there narrowed by about $1bn from a year ago to $400m as assets shrunk by 23 per cent. Along with other banks, loan loss releases are also underpinning results as credit quality improves. Nonetheless, return on equity remains an unimpressive 7.8 per cent. Trading was a trouble spot for all Wall Street banks last quarter – and Citigroup’s revenue from fixed income markets dropped 18 per cent, excluding an accounting quirk related to value of the bank’s debt.

 

Beyond the financials, Citigroup said it found another alleged fraud at its Mexican business. It is small compared to last time (less than $30m, versus $400m misappropriated in a case related to Oceanografia, a supplier to Pemex), but this revelation does not boost confidence in Citigroup’s ability to control its extensive global operations. The bank stumbled in the stress tests not over its actual capital levels, but inadequacies in its processes for capital planning. That failure means Citigroup will probably miss its return on tangible common equity target of 10 per cent for 2015 because it was contingent on capital return.

 

Shares on Monday popped 4 per cent, but they are lagging behind peers over the past year and remain below Citigroup’s tangible book value. The bank needs to clean up its processes and produce even better profits for the stock to break out.

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