Quite a day for Vikram Pandit. The Citigroup chief cut his salary all the way back to $1 - and now his stock price falls even below that. Yes, C has broken the buck.
Bloomberg nicely sums up the story, including the now somewhat ironic circumstances behind the group’s formation - the repealing of the Glass-Steagall Act itself, the old regulatory wall that had until the merger of Citigroup and Travelers separated commercial banking from investment banking and insurance.
March 5 (Bloomberg) — Citigroup Inc. dropped below $1 in New York trading for the first time, the latest sign that stock investors are losing confidence in a company that was once the world’s biggest bank by market value. The stock fell to 99 cents at 11:22 a.m. on the New York Stock Exchange, marking an 85 percent decline this year and giving the company a market value of $5.5 billion. At its peak in late 2006, Citigroup stock was worth $55.70, giving the company a market value of $277.2 billion. Citigroup has reported more than $37.5 billion in net losses during the last five quarters and the U.S. government has provided the company with $45 billion. Last week, the government agreed to convert the preferred stock it owned in Citigroup to common shares, gaining a 36 percent stake in the company and boosting its buffer against future losses.
NYSE Euronext, which owns the New York Stock Exchange, has suspended until June 30 a rule that delisted companies trading below $1 after six months. The change was made to help prevent a wave of delistings after the Standard & Poor’s 500 Index fell to a 12-year low. Citigroup was created by the 1998 combination of Citicorp and Travelers Group Inc., which with a value of $85 billion was the largest merger in history at the time. The transaction helped persuade the U.S. government to repeal a Great Depression-era law, the Glass-Steagall Act, that prohibited banks that took consumer deposits from engaging in investment-banking activities.
