Citigroup worries mount, shares tumble 23 percent

NEW YORK (Reuters) - Citigroup Inc faced growing uncertainty on Wednesday about whether it will rebound from punishing losses, as investors drove the stock below $5, its lowest level since a government rescue in November.

More bad news is expected on Friday, when the bank plans to report quarterly results, six days ahead of schedule, and analysts are looking for a fifth straight multibillion-dollar loss. The bank is also widely expected Friday to provide details of a comprehensive downsizing designed to ensure its survival.

Rival JPMorgan Chase & Co also moved up its earnings report by six days to Thursday.

Once the world's largest bank, but now No. 3 in just the United States, Citigroup is expected to shrink by about one-third as it focuses on corporate, investment and retail banking and trims trading operations, a person familiar with the plan said.

Citigroup will also put unwanted businesses and assets into a separate structure, with an eye toward their eventual sale, the source said.

The U.S. Treasury Department has pumped $45 billion of taxpayer funds from the Troubled Asset Relief Program, including $20 billion on November 23, when the government agreed to a bailout, sharing in bank losses in exchange for preferred stock and warrants.

The bailout helped avoid a collapse on the heels of the Lehman Brothers Holdings Inc's bankruptcy on September 15.

"I really don't know how the unraveling finishes," said Henry Asher, president of Northstar Group Inc in New York. "It looks like the government is forcing a controlled descent, without going the full monty as it did with Lehman."

In a memo to employees, Chief Executive Vikram Pandit said the bank is ready to release earnings on Friday, with "no need to wait" another six days.

Pandit, who turned 52 on Wednesday, also said while Citigroup's goals include a streamlining of operations and strengthening of its balance sheet, "We are and will remain a bank." He said the bank faces a "long-term transformation."

Shareholders have shown little patience. Citigroup shares fell $1.37, or 23.2 percent, to $4.53 Wednesday as trading volume topped 510 million shares.

Other bank stocks also declined, including larger rivals Bank of America Corp and JPMorgan, which fell 4.2 percent and 1.7 percent, respectively. The 24-member KBW Bank Index .BKX slid 6 percent and touched a 13-year low.

PANDIT'S ABOUT-FACE

Getting rid of major assets marks an about-face for Pandit, who wanted to shrink the bank while keeping large parts of the "financial supermarket" model promoted by Sanford "Sandy" Weill, who created Citigroup in a 1998 merger.

On Tuesday, Citigroup said it will combine its Smith Barney brokerage and other units with Morgan Stanley's wealth management unit. Morgan Stanley will pay $2.7 billion and take a 51 percent stake in the joint venture, and can buy the rest after five years.

While the transaction will bolster Citigroup's balance sheet and result in a $5.8 billion gain, the decline in the stock resembled the downdraft on November 17-21, the week before Citigroup got the second TARP infusion. Shares fell 60.4 percent that week.

"We continue to be concerned that weakness in Citigroup's share price may lead to lack of customer (or government) confidence," Barclays Capital analyst Jason Goldberg wrote on Wednesday.

There has been a drumbeat of analysts' questions about whether regulators or Citigroup directors and executives will give Pandit time to finish the job.

"Regulators are concerned about the quality of the management that got us where we are in the banking industry," said Nancy Bush, an independent banking analyst and managing member of NAB Research LLC. "At Citigroup, the government has far more influence than on any other bank in the industry, and that's why there may be more force to bear there."

WHERE ARE THE BUYERS?

Pandit became CEO in December 2007, inheriting many problems from predecessor Charles Prince.

The bank has reported $20.3 billion in net losses, and taken more than $64 billion in credit losses and writedowns since Pandit took over.

Critics have said Pandit, known from his days as a top Morgan Stanley executive as a brilliant but cautious leader, was not aggressive enough in tackling the morass that Citigroup's $2 trillion-plus balance sheet had become.

Citigroup's ability to spin off assets may be limited. "We question where the buyers will come from, since few are both large enough and strong enough," wrote David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller. He rated Citigroup shares as "in line."

Ten analysts who issued estimates over the last week look for a fourth-quarter loss of 94 cents per share, on average, according to Reuters Estimates.

The annual cost of protecting $10 million of Citigroup debt against default for five years rose to $410,000 on Wednesday from $265,000 Tuesday, according to Phoenix Partners Group.


 

On Monday's episode of "The Glenn Beck Radio Program," Glenn opened up about the tragic death of his brother-in-law, Vincent Colonna Jr., who passed away unexpectedly on April 5. He also shared some of the important thoughts and insights he's learned through the grieving process.

"Last Monday, I was sitting in this chair ... the two-minute warning comes and Stu said to me, 'You ready for the show?'' ... And that's when my wife [Tania] came to the door of the studio here at our house and said, 'I...' and she held the phone up. And then she collapsed on the floor in tears," Glenn began. "Tania's brother had passed. To say this was a shock, is an understatement."

Glenn described his brother-in-law as having "a servant's spirit."

"He was always the guy who lit up the room. He was always the guy helping others. He would never stop, because he was always helping others," Glenn said of Vincent. "He was on the school board. He was a little league coach. He was the soccer coach. He helped build the church. He took care of the lawn of the church. He was constantly doing things, raising money for charity, working over here, helping to organize this. But he was never the guy in the spotlight. He was just the guy doing it, and you had no idea how much he had done because he never talked about it.

"We also didn't know how much mental anguish he was in because he never talked about it. And last Monday morning, after spending Easter with the family ... he killed himself. This is now the third family member of mine that has gone through this. And I keep seeing it play out over and over and over again, in exactly the same way."

Glenn described his thoughts as he, Tania, and her family struggled to come to grips with the devastating loss.

"I learned some really important things as I was watching this wake. I'm seeing these people from all walks of life ... the people that were there, were there because [Vince] made a difference in their life. He was a true servant. As I'm watching this, all that kept going through my mind was, 'by their fruits, ye shall know them.' The fruits of his labor were on display. He was a servant all the time. All the time ... he found a way to love everybody.

"There are two great commandments: Love God with all your heart and mind and soul. And love your neighbor. So those two great commandments boil down to: Love truth. Because that's what God is," Glenn said.

"Love thy neighbor. That's where joy comes from. The opposite of joy is despair, and that is the complete absence of hope ... and how do you find joy? You find joy by rooting yourself in the truth. Even if that's a truth you don't want to accept. Accept the truth," he added. "But we have to stop saying that there's nothing we can do. What are we going to do? Well, here's the first thing: stop living a lie."

Watch the video clip below to hear more from Glenn:


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After imprisoning a pastor for refusing to follow COVID-19 restrictions, Canadian officials barricaded his church. And when some church members retaliated by tearing down part of the fence, Canadian Mounties arrived in riot gear.

Rebel News Founder Ezra Levant joined Glenn Beck on the radio program to give his insight on the crazy situation. He described the new, armed police presence surrounding GraceLife Church in Edmonton, Alberta, and how it not only encouraged hundreds of protesters to stand with the church in support but forced congregation members underground to worship as well.

What's happening is eerily similar to what occurs everyday in China, Levant says, and it must stop. Who would have thought this type of tyranny would be so close to home?

Watch the video below to hear Ezra describe the religious persecution taking place in Canada.


Want more from Glenn Beck?

To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

Enough prayers? Why is supposed Catholic Joe Biden suggesting that Congress ought to stop praying for after someone commits acts of gun violence?

On Friday, Stu Burguiere and Pat Gray filled in for Glenn and discussed President Joe Biden's remarks during his speech on gun control. "Enough prayers. Time for some action," Biden said. Stu and Pat were surprised how dismissive Biden appeared to be on the idea of prayer.

Watch the clip to hear more. Can't watch? Download the podcast here.

Want more from Glenn Beck?

To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.

Just days after Canadian pastor James Coates was released from prison for refusing to bow to COVID-19 lockdown restrictions, several police officers showed up at another church to ensure restrictions were being followed. But Polish pastor Artur Pawlowski of the Cave of Adullam Church in Alberta, Canada, knew his rights, telling the cops not to come back until they had a warrant in hand.

Filling in for Glenn Beck on the radio program this week, Pat Gray and Stu Burguiere played a video of the interaction.

"Please get out. Please get out of this property immediately. Get out!" Pawlowski can be heard yelling at the six officers who entered his church.

"Out! Out! Out! Get out of this property immediately until you come back with a warrant," he continued. "Go out and don't come back. I don't want to talk to you. You Nazis, Gestapo is not allowed here! ... Nazis are not welcome here! Do not come back you Nazi psychopaths. Unbelievable sick, evil people. Intimidating people in a church during the Passover! You Gestapo, Nazi, communist fascists! Don't you dare come back here!"

Watch this clip to see the heated exchange:

Want more from Glenn Beck?

To enjoy more of Glenn's masterful storytelling, thought-provoking analysis and uncanny ability to make sense of the chaos, subscribe to BlazeTV — the largest multi-platform network of voices who love America, defend the Constitution and live the American dream.