Is Citibank the next to collapse?
November 23, 2008
Before, it was Bear Sterns. Then AIG. Then Lehman Brothers. Is Citibank the next big, global bank to fail?
Yes, according to some financial experts interviewed by the UK newspaper The Daily Mail. According to analysts, the company may not have enough cash to withstand subprime losses that could amount to £13.3 billion.
This uncertainty about the company’s future caused Citigroup’s shares to plummet 20% when trading opened on Wall Street last Friday, November 21.
The stock closed at $3.77 — a huge drop from its 52-week high of $34.77.
Of course, many people still believe that the US government will not allow a big bank such as Citigroup to collapse. In a Bloomberg interview, a former US Treasury Department general counsel said that “[t]here is no question that Citigroup will not be allowed to fail.”
For these people, the “Big Bank” theory will prevail, as in the case of the bailout of AIG.
As a cost-cutting measure, Citigroup CEO Vikram Pandit said the company will cut around 52,000 jobs next year.
But will that be enough to save the world’s largest bank?
Whatever the case is, Citibank account holders in the Philippines are concerned. They ask: if Citigroup goes bankrupt, what will happen to Citibank Philippines? Is there a reason now to jump ship?
Share your thoughts in the forum discussion thread Citibank Philippines.