WORLD> America
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WORLD> America
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Citigroup posts loss, splits up the bank
(Agencies)
Updated: 2009-01-16 23:29 Many shareholders criticize Citigroup's board and previous management for allowing too much risk-taking. Back in July 2007, when mortgage defaults were piling up but the credit markets were still functional, Citigroup's then-CEO Charles Prince told the Financial Times: "When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing."
(Another protege of Weill - JPMorgan Chase CEO Jamie Dimon - has garnered praise on Wall Street and in Washington for running a more stable enterprise than Citigroup. JPMorgan just barely eked out a profit for the fourth quarter, it said Thursday.) Now that Citigroup will be relying more on basic banking, it must address its weaknesses in that area. Citigroup recently lost the opportunity to buy Wachovia Corp.'s US deposit base to Wells Fargo & Co. Meanwhile, JPMorgan Chase & Co.'s deposit base soared after it bought Washington Mutual Inc. And the bank's results Friday showed that credit deterioration was severe in the fourth quarter, from North America to Europe to Latin America to Asia. Even if Citigroup separates its "bad" assets from its "good" assets, the bank still faces strong headwinds to profitability. "A major challenge," Ely said, "is how are they going to build a meaningful domestic banking business?"
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