Citigroup already on capital raising frenzy, in just the past two hours has ramped that frenzy yet another notch.
Citigroup Inc. is going back to the markets for more funds, less than two weeks after reporting nearly $14 billion in write-downs and a week after selling $6 billion in preferred stock. Tuesday afternoon, the largest U.S. bank by assets said it will sell at least $3 billion in common stock to beef up its capital.
Is it simply the share size of the bank requiring the intense cash cowing to everyone in the world or more? When will Citi become the next Bear Stearns? It would be interesting to see what Pandit sees. Even without that view it’s clear that self destructive, dilutive efforts such as Citi is engaged in can at best only buy time, maybe only renting it at that (sale of common stock is dilutive shareholders).
Citigroup has already written down $67.1 billion and raised up more than $36 since the on set of the credit crunch in 2007 ($9 billion in Q1 2008). The bank also reported a first-quarter 2008 loss of $5.1 billion. So when will it end? Citigroup said it is targeting its Tier 1 target at 7.5%. When asked if the bank would need more capital CFO Gary Crittenden said
“The fact is, you can never say never with regards to these things,” he said on a conference call with analysts. “I mean our commitment is to have a strong capital base, and so we will monitor this and we do monitor this virtually every day.”
What he means is that like a patient on life support, until the they die.