Will Citi Become RiyahdCiti Bank?

Does it really matter to the majority of stakeholders that Citi (C) may possibly be renamed RiyahdCiti Bank, controlled by the Kingdom Holding Company of Prince Al-Waleed? I think not.

Unlike an industrial corporation whose assets cannot be moved to another country without shutting down the fixed plant and permanently eliminating local jobs, often to the destruction of the regional economy as we are seeing with the so-called Big 3 automakers, a bank is unique.

Financial assets and liabilities of a bank can move with a single keystroke. The employees, clients, and vendors may take a few days, but they too can move. So, the bottom line to a bank is reputation, and any bank that loses that is in trouble. Rather than move headquarters to a new city or different country, a bank may just have to shut down altogether.

The Board of Directors of Citigroup has an important decision to make sometime soon, probably within hours. The stock at this point is essentially a penny stock, which means it is now a speculation.

No bank can remain a speculation for long. The stakeholders will not permit it.

Yesterday, C shares plunged -26.4%. The day before they plunged -23.4%. The share price, which had been a high of $23.21 in October, is now just $4.71. This is the end of Citi. All that waits is the decision as to the identity of the new control group.

Posted in Categories: Contributor, External Research, Financial, Stocks.

Subscribe by RSS Subscribe by Email