Tag Archives: Citigroup

Citi Has an Alternative ‘Big Short’ on Retail

Wall Street’s bet against empty malls is getting too crowded, according to Citigroup Inc. analysts, who instead recommend wagering against individual retailers as the “next big short.”

Investors should consider buying default protection through the derivatives market on a basket of bonds from retailers that include Target Corp., Gap Inc., Nordstrom Inc. and Macy’s Inc., according to Citi’s Anindya Basu and Calvin Vinitwatanakhun.

The strategy differs from the one pursued by a growing number of hedge funds, which have wagered against mall properties through CMBX derivatives indexes that tracks commercial mortgage-backed securities. The prevailing theory is that failing brick-and-mortar retailers will mean higher vacancies and bankruptcies for mall operators, with losses inflicted on CMBS holders.

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Citigroup, JPMorgan Face Euribor Antitrust Class Action

Law360, New York (February 21, 2017, 10:34 PM EST) — A New York federal judge on Tuesday trimmed a putative class action brought by investors who say they lost money in derivatives transactions because big banks conspired to manipulate Euribor, the euro interbank offered rate. But two plaintiffs, including a California retirement fund, still have claims against JPMorgan and Citigroup.
U.S. District Judge Kevin Castel cut four plaintiffs from the suit, saying they lacked standing, as well as six foreign defendants who didn’t fall under his jurisdiction because their allegedly illegal activities weren’t tied to the U.S. He also dismissed all Racketeer Influenced and Corrupt Organizations Act and Commodity Exchange Act claims from the suit and cut three out of four Sherman Act claims in the case.

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Citigroup focus of federal probe into foreign hiring practices

Marketwatch:

Citigroup Inc. C, -1.75% said late Friday that federal officials have launched a probe into the bank’s foreign hiring practices, according to a Securities and Exchange Commission filing. “Government and regulatory agencies in the U.S., including the SEC, are conducting investigations or making inquiries concerning compliance with the Foreign Corrupt Practices Act and other laws with respect to the hiring of candidates referred by or related to foreign government officials,” Citigroup said in the filing.

Citigroup to exit U.S. mortgage servicing operations by 2018

Citigroup Inc (C.N) said on Monday it would speed up the transformation of its U.S. mortgage business by exiting servicing operations by the end of 2018.

Citi said it would sell its mortgage servicing rights on about 780,000 Fannie Mae and Freddie Mac loans of non-Citibank retail customers to New Residential Mortgage LLC (NRZ).

The remaining Citi-owned loans and other mortgage servicing rights not sold to NRZ are expected to be transferred to loan servicing provider Cenlar FSB [CENLR.UL] in 2018.

The lender said it expected these deals to hurt first-quarter pretax results by about $400 million, including a loss on sale and certain related transaction costs.

The move is intended to simplify CitiMortgage’s operations, reduce expenses and improve returns on capital as the company focuses on mortgage originations.

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A Citigroup Lawyer Helped Trump Pick Bank Regulators, Then Returned To Work At The Bank

NEW YORK ― Sometimes the revolving door spins fast. Before President Donald Trump was inaugurated, Julie Lindsay, a top lawyer at Citigroup, was working for the president-elect to fill key posts at agencies that are supposed to oversee banks — including the Consumer Financial Protection Bureau, the agency that’s the brainchild of bank foe Sen. Elizabeth Warren (D-Mass.).

Now, Lindsay is back at work at Citigroup, a spokeswoman for the bank told The Huffington Post on Wednesday.

Lindsay, a managing director at Citi, had been working on the Trump transition, gathering information about the policy direction and potentially drawing up lists of political appointees to serve at the governing body of the Federal Reserve, at the Consumer Financial Protection Bureau, and on the Treasury Department’s Financial Stability Oversight Council. The FSOC is made up of regulators from various agencies and monitors the financial system and has broad powers to take action to ensure its stability — such as breaking up big banks like Citigroup if they become too risky.

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Citigroup : fined $28.8 million for harm to home borrowers

Citigroup Inc (>> Citigroup Inc) mortgage units have been fined $28.8 million for keeping home borrowers in the dark about options to avoid foreclosure and making it difficult for them to apply for relief, the U.S. consumer finance watchdog said on Monday.

CitiMortgage will pay an estimated $17 million to compensate wronged consumers, as well as a civil penalty of $3 million, the Consumer Financial Protection Bureau said. CitiFinancial Services will refund approximately $4.4 million to consumers, and pay a civil penalty of $4.4 million.

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Citigroup is finally be shutting down its ‘bad bank’ — 8 years after the financial crisis

When Citigroup reported earnings on Wednesday, it announced a major milestone that its investors should cheer. The New York-based bank said that the fourth quarter of 2016 was the last time it’d separate the results from its Citi Holdings subsidiary, which was created in the wake of the financial crisis to house the bank’s toxic and noncore assets.

More than any other major bank, Citigroup found itself in the crosshairs during the crisis eight years ago. Its decision to double down on subprime mortgages on the eve of the downturn led to a $17 billion loss in the fourth quarter of 2008 alone. It followed that up with a nearly $8 billion quarterly loss a year later.

To survive, Citigroup received tens of billions of dollars’ worth of capital from the federal government, which it later had to repay by issuing new common stock and thereby diluting longtime shareholders. The net result was that, even today, its shares are down more than 90% from their pre-crisis high.

One of Citigroup’s strategies to stem the flow of losses was to quarantine the responsible assets and operations in a separate subsidiary, Citi Holdings, which it created in the second quarter of 2009. “Citicorp is our core franchise and will be the source of Citi’s long term profitability and growth,”  explained former-CEO Vikram Pandit at the time. “We will manage our businesses and assets in Citi Holdings to optimize their value over time.”

At its peak, Citi Holdings administered more than $800 billion worth of assets. Considered on its own, that would make Citi Holdings the fifth largest bank in the country both now and when it was created.

Fast-forward to today, and Citigroup has whittled down the assets in Citi Holdings to $54 billion, which equates to only 3% of Citigroup’s balance sheet. Just as importantly, as Citigroup’s current CEO Michael Corbat observed in prepared remarks released Wednesday, the unit has been profitable for 10 quarters in a row.

Citigroup’s decision to shutter Citi Holdings follows on the heels of Bank of America, which responded to the crisis in a similar way. Not long after Citigroup’s decision to bifurcate its operations into good and bad banks, the North Carolina-based bank created its Legacy Assets and Servicing division to serve the same role as Citi Holdings.

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