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’Citi results disappoint
Hey, we said the top line might be ugly.
Here’s a quick roundup of the major items hurting revenues and earnings from Citi’s release on Tuesday, including the relevant excerpts:
– A big hit to revenues from the ongoing (and deliberate) reduction of assets in its Citi Holdings unit:
Citi’s revenue EMphasis
For those following the US bank earnings play by play (and you’re about to have a busy week), here’s an interesting take from Nomura on something specific to look for in Citi’s upcoming release at 8am EST:
Pandit’s big idea
FT Alphaville has intercepted a recent phone call between banks and their regulators!!!
Regulators: “We’re going to revise the capital adequacy framework and increase transparency in the reporting of risk on bank balance sheets.”
Not even in Japan…
Whatever is decided at the Save the Euro summit, it seems certain the eurozone is heading into recession.
But not just any recession, this will be a protracted one reckons Citigroup.
Our economists believe the sovereign debt and banking crises are causing a renewed recession in the Euro Area.
[Something for the weekend] Don’t offer this man a Rakoff
Jed Rakoff is quite the hero. A New York District judge, he has done what the rest of us would love to do, and busted a cosy deal between bankers and their regulators. In early 2007, just when everything was starting to slide,
Jefferies: for the love of a Greek God, how many times must we explain this?
Jefferies really wants you to know that its net position is “insignificant”.
In a statement released on Friday the broker took the rare step of disclosing not only the size of its dealings with peripheral Europe,
Papandreou plunge… or Corzine crash?
Then again, it is 1.11.11, or 11.1.11 for our American friends.
Financials taking a battering on Tuesday morning in New York (S&P 500 down 2.46 per cent at pixel time):
The continuing mystery of US banks’ European exposure
Europe may or may not be saved but Q3 earnings releases by US banks suggest they’re content with their exposure to the continent.
We looked at the methodology behind exposure disclosure in this post.
Citi, Credit Suisse settle SEC CDO probe
Sums involved: $285m for Citigroup, $2.5m for Credit Suisse.
From the SEC release:
Washington, D.C., Oct. 19, 2011 – The Securities and Exchange Commission today charged Citigroup’s principal U.S.
Spreads and the Citi
Clearly, gaining $1.9bn in revenue from your own credit spreads blowing out must be the trophy asset for the A/W ’11 US bank earnings season…
Citigroup’s Q3 results, out on Monday (total revenue $20.8bn):
It’s going to be a miserable third quarter for banks, say banks
US bank reporting season is almost upon us and we’re looking forward to investigating the mysteries surrounding the performance of the bulge bracket since the turn of the year.
To give you a sense of how bad it’s been for the 1 per cent,
The mystery of US banks’ European exposure
This might just be the most important piece of paper in US banking right now:
FFIEC 009 is the form US banks send to regulators about their exposure to Europe (sovereigns and corporates) and it provides the basis for many of the estimates of vulnerability.
A genuinely stressful stress test
Wouldn’t it be nice if bank stress tests were, well, stressful?
Too often they look like they’re done by him:
When they should be done by her:
Fortunately Arbuthnot’s Mr. Banks, James Ferguson,
Citi: Euro area recession likely to begin in Q4
UPDATE: As a commenter pointed out, Willem Buiter didn’t write some of the sections we quoted from below, and we’ve updated accordingly. His name is at the top of the Citi note that we’re excerpting, but the actual passages were written by other economists.
Fannie and Freddie’s revenge — the details [updated]
– By John McDermott and Cardiff Garcia
The details of the US government’s attempted bank raid are coming in on Friday afternoon.
The Federal Housing Finance Agency has filed 17 lawsuits against banks operating in the US.
China and the commodities bears
The China Flash PMI for August of 49.8 was met with relief today, even though it’s the second negative month in a row.
It’s that kind of scene now, however, when equity markets seem to be hoping for some kind of QE3 announcement at Jackson Hole on Friday even though a) it’s not an FOMC meeting,
The City earnings game
We all know that selective disclosure of price-sensitive information – for example, guiding down analyst forecasts – is frowned upon by the regulatory authorities in this country.
And that creates a problem for listed companies.
Farewell G7 AAA’s
As rumours (scurrilous, nonsense – Ed.) swirl in the market of a French rating downgrade, Citigroup’s chief economist Willem Buiter is considering a much bigger issue – a world without any AAA G7 sovereigns.
Flat BAC
Seems the only way to describe Bank of America’s CDS curve after Monday’s (margin?) disaster. Citi appended for contrast:
One-year BAC CDS jumped from 99bps to 285bps, according to Markit data. Well.
Goldman: this is not 2008
US financials are melting on Monday:
As at pixel time, we’re facing a broad-based sell-off but the banks are among the hardest hit.
However, Goldman Sachs, appropriately enough, reckons this will be a short-term soft patch.
Credit rating cliff risk, redux
And the slow drain of financial crisis support from formerly ‘TBTF’ banks continues apace.
On Thursday, Moody’s announced it would be putting the credit ratings of Bank of America, Citigroup and Wells Fargo on review for downgrade after taking a closer look at incoming financial reform:
A Greek farce
Now — far be it from FT Alphaville to tell the Athens public prosecutor what to do, however…
Greece’s finance ministry has blamed a bank trader’s email for spreading rumours that the country will default this weekend.
Greece vs Citigroup
We have a name! Greece didn’t identify the bank they’re investigating for allegedly spreading rumours that it will restructure debt this weekend. (Which was a daft conjecture indeed.)
The Guardian has just identified which bank:
Further further reading
For the commute home, where your kids are tagging embarrassing pictures of you on Facebook,
- The Economist halts production for a month to let its readers catch up. (Or so says America’s finest news source.)
- The myth of the Fed’s “unprecedented”
Citi’s Basel-dodging, capital-avoiding, accounting switch
Citi doing weird accounting manoeuvres? Perish the thought!
From the bank’s first-quarter results press release:
In the first quarter 2011, Citigroup transferred $12.7 billion of assets in the Special Asset Pool in Citi Holdings from HTM to trading.
Glencore prepares for take-off
After weeks of speculation (and spin) Glencore has finally published its Intention to Float document.
A lot of it is has already found its way into the public domain, but there are some additional nuggets like details of Glencore’s trading strategies (to follow in a separate post).
Don’t be surprised if NYSE volumes drop
… on account of Citigroup’s reverse share split.
Jeffrey Rubin at Birinyi Associates points out on Thursday that so far in 2011, Citigroup has on average represented 11 per cent of the entire daily volume of the New York Stock Exchange.