Citigroup may put more employees on commission or offer them larger base salaries as it tries to retain key staffers without running afoul of laws limiting executive pay at banks that receive government funds.
Three people familiar with the matter said the bank has examined a series of possible moves, including special stock-based bonuses, or offering employees a percentage of their group's revenue.
Banks across Wall Street are struggling to reward top performers without violating an amendment to the 2009 stimulus package limiting executive pay. That amendment calls for the Treasury Secetary to review compensation of top employees at any major recipient of funds from the government's Troubled Asset Relief Program.
Bonuses are expected to face particular scrutiny after Wall Street firms paid $18.4 billion of bonuses in 2008, a year in which the U.S. financial sector required more than $1 trillion of government support.
Some banks, most notably Goldman Sachs Group Inc, hope to repay their TARP funds as soon as possible, in part to avoid having to comply with pay limits.
Citigroup, which has received $45 billion of TARP capital and is not believed to have much hope of paying the government back anytime soon, is having discussions with the government about measures that might be appropriate for retaining revenue producing employees.
A number of possibilities are under discussion, and generally are geared toward ensuring that employees are motivated to perform well. The No. 3 U.S. bank will have a better sense of how to proceed once the Treasury Department crafts more specific guidelines on pay, one person said.
Of particular concern is the Phibro business, which has been extraordinarily profitable. If Citigroup cannot find ways to compensate people there, the energy trading business may be spun off, sold, or opened to outside investors, a person familiar with the matter said. News of this possibility was first reported in the Wall Street Journal.
The Wall Street Journal also reported that Citigroup had asked the Treasury Department for permission to pay special bonuses to key employees.
One scenario discussed internally would be a one-time bonus paid to employees mainly in stock that would vest over at least three years.
Citigroup spokesman Stephen Cohen said in an emailed statement that the bank has not presented Treasury with any specific plan for staff retention or special cash payouts.
"Citi continues to examine ways to ensure its employee compensation practices are competitive in this very challenging market environment," Cohen said in the statement.
The alternatives that Citigroup is considering to standard discretionary bonuses still have flaws with them, experts said.
Commissions, for example, only work well for professionals in sales positions, and even then can lead to conflicts over which sales person was responsible for a deal. Giving percentages of revenue could result in outsized paydays
if a business outperforms, which could lead to public outcry.
"There's no perfect answer to this issue," said Michael Holland, founder of Holland & Co, which oversees more than $4 billion.
STEMMING THE EXODUS
But banks have every incentive to figure out how to retain their top staff. On Monday, a source said two equity traders and a salesman from Bank of America Corp (BAC.N) moved to hedge fund giant Citadel Investment Group. Foreign banks such as Deutsche Bank (DBKGn.DE) have also been able to hire employees from U.S. competitors.
In fact, banks that are not profitable will likely have trouble from a political standpoint paying employees anything but stock in bonuses, while banks that are profitable will likely look to repay TARP as quickly as possible to eliminate restrictions they face.
"I just don't think all this planning for other ways to pay people will amount to anything," said Paul Sorbera, a recruiter at Alliance Consulting in New York.
But for now, banks are concerned about retaining staff, and ensuring they are properly motivated.
"If we can't pay people competitively, we can't expect them to stay here," said one bank executive.
Agencies
Showing posts with label Bank of America. Show all posts
Showing posts with label Bank of America. Show all posts
Tuesday, May 5, 2009
Thursday, April 2, 2009
Are Satyam employees set to join BoA?
About 250-300 employees at fraud-hit Satyam Computer Services are joining Bank of America, a newspaper said on Wednesday.
The employees were working on a Satyam project for Merrill Lynch, which was taken over by the US bank after it was hit by the subprime crisis last year, it said.
The project was not renewed by Merrill after Satyam was caught in country's biggest corporate scandal and the work of managing its database and providing infrastructure support would now be done in-house, the paper said.
The first of these employees will join Bank of America between April 2 and 8, it said, adding they have been given salary increases of around 10 per cent and joining bonuses.
A spokeswoman for Satyam said, "The report is speculative." An official at Bank of America-Merrill Lynch in India said she could not immediately comment.
Satyam, whose market value has slid to $505.6 million from $7 billion last May, is in the midst of a bidding process to find a new buyer. It plunged into a crisis in January after its founder quit as chairman revealing profits had been falsified for years.
Engineering conglomerate Larsen & Toubro and mid-sized outsourcer Tech Mahindra are among the suitors, and local media have said US private equity WL Ross & Co was also among the bidders.
Agencies
The employees were working on a Satyam project for Merrill Lynch, which was taken over by the US bank after it was hit by the subprime crisis last year, it said.
The project was not renewed by Merrill after Satyam was caught in country's biggest corporate scandal and the work of managing its database and providing infrastructure support would now be done in-house, the paper said.
The first of these employees will join Bank of America between April 2 and 8, it said, adding they have been given salary increases of around 10 per cent and joining bonuses.
A spokeswoman for Satyam said, "The report is speculative." An official at Bank of America-Merrill Lynch in India said she could not immediately comment.
Satyam, whose market value has slid to $505.6 million from $7 billion last May, is in the midst of a bidding process to find a new buyer. It plunged into a crisis in January after its founder quit as chairman revealing profits had been falsified for years.
Engineering conglomerate Larsen & Toubro and mid-sized outsourcer Tech Mahindra are among the suitors, and local media have said US private equity WL Ross & Co was also among the bidders.
Agencies
Saturday, January 3, 2009
US credit card cos losses could top $70 billion in 2009
Credit card companies have little to celebrate as many analysts brace for 2009 to be one of the worst years on record for consumer credit.
Losses for the industry could top $70 billion, but it is hard to predict how bad the pain will be.
US consumers have never before been so deeply in debt. There was nearly $1 trillion of credit and charge card debt outstanding as of October, up more than 25 per cent since 2003, according to the US Federal Reserve. That is in addition to $10.54 trillion in mortgage debt.
Unemployment, already at 15-year highs, is expected to rise to its highest levels since the early 1980s, when credit cards were not nearly as widespread.
In short, there's more debt than ever and fewer people are able to pay it.
"In many ways, we're in uncharted territory," said John Williams, an analyst at Macquarie Research.
Major credit losses are big trouble for Citigroup Inc, Bank of America, and other card issuers such as American Express Co and Discover Financial Services, which have seen their shares lose up to 80 per cent of their value in 2008.
The United States is not standing idly by. Citigroup received $45 billion of taxpayers' money in October and November. Bank of America has received $25 billion. American Express, which became a bank holding company, got approval last week to receive $3.4 billion from the taxpayer-funded Troubled Asset Relief Program.
Lenders, seeing potential big losses, are trying to protect themselves by tightening credit availability, which leaves consumers with fewer options.
This year's holiday shopping season was the worst since at least 1970, according to a report from the International Council of Shopping Centers.
"It is hard to see the light at the end of the tunnel," Williams said.
NOWHERE TO HIDE
No credit card company is safe. According to Citigroup analysts, more than one-fourth of the credit card portfolios of Citibank, Bank of America Corp, Capital One Corp, and Discover are subprime, which could lead to further losses.
Meanwhile, American Express is heavily exposed to troubled markets with high default rates such as Florida and California, and JP Morgan Chase & Co has to digest the portfolio of failed savings and loans company Washington Mutual.
Together, these six companies hold around 90 per cent of the total US outstanding credit card debt.
Citigroup and American Express have said they are tightening lending to mitigate their losses. JP Morgan and Bank of America declined to comment, while Capital One did not return calls seeking comment.
Credit card companies have reported increased losses. Discover, the No 4 US credit card network, posted worse-than-expected results in its fourth fiscal quarter, the first sign of the harsh deterioration of the industry, when the economic downturn picked up steam in October and November.
Discover almost doubled the money it set aside to cover credit losses. Analysts said its competitors would likely do the same in coming Credit Cards quarters, leading to lower earnings.
"Things have changed pretty rapidly in the last two months. I'm hopeful that we will see the worst in 2009, but I don't know yet," David Nelms, chief executive of Discover, told reporters in a recent interview.
Many analysts and credit card executives look at 2009 and remember the beginning of the mortgage crisis in early 2007, when lenders consistently underestimated what was coming up.
Said Chris Brendler, analyst at Stifel Nicolaus, "The risk is that things get much worse than expected."
Source: Agencies
Losses for the industry could top $70 billion, but it is hard to predict how bad the pain will be.
US consumers have never before been so deeply in debt. There was nearly $1 trillion of credit and charge card debt outstanding as of October, up more than 25 per cent since 2003, according to the US Federal Reserve. That is in addition to $10.54 trillion in mortgage debt.
Unemployment, already at 15-year highs, is expected to rise to its highest levels since the early 1980s, when credit cards were not nearly as widespread.
In short, there's more debt than ever and fewer people are able to pay it.
"In many ways, we're in uncharted territory," said John Williams, an analyst at Macquarie Research.
Major credit losses are big trouble for Citigroup Inc, Bank of America, and other card issuers such as American Express Co and Discover Financial Services, which have seen their shares lose up to 80 per cent of their value in 2008.
The United States is not standing idly by. Citigroup received $45 billion of taxpayers' money in October and November. Bank of America has received $25 billion. American Express, which became a bank holding company, got approval last week to receive $3.4 billion from the taxpayer-funded Troubled Asset Relief Program.
Lenders, seeing potential big losses, are trying to protect themselves by tightening credit availability, which leaves consumers with fewer options.
This year's holiday shopping season was the worst since at least 1970, according to a report from the International Council of Shopping Centers.
"It is hard to see the light at the end of the tunnel," Williams said.
NOWHERE TO HIDE
No credit card company is safe. According to Citigroup analysts, more than one-fourth of the credit card portfolios of Citibank, Bank of America Corp, Capital One Corp, and Discover are subprime, which could lead to further losses.
Meanwhile, American Express is heavily exposed to troubled markets with high default rates such as Florida and California, and JP Morgan Chase & Co has to digest the portfolio of failed savings and loans company Washington Mutual.
Together, these six companies hold around 90 per cent of the total US outstanding credit card debt.
Citigroup and American Express have said they are tightening lending to mitigate their losses. JP Morgan and Bank of America declined to comment, while Capital One did not return calls seeking comment.
Credit card companies have reported increased losses. Discover, the No 4 US credit card network, posted worse-than-expected results in its fourth fiscal quarter, the first sign of the harsh deterioration of the industry, when the economic downturn picked up steam in October and November.
Discover almost doubled the money it set aside to cover credit losses. Analysts said its competitors would likely do the same in coming Credit Cards quarters, leading to lower earnings.
"Things have changed pretty rapidly in the last two months. I'm hopeful that we will see the worst in 2009, but I don't know yet," David Nelms, chief executive of Discover, told reporters in a recent interview.
Many analysts and credit card executives look at 2009 and remember the beginning of the mortgage crisis in early 2007, when lenders consistently underestimated what was coming up.
Said Chris Brendler, analyst at Stifel Nicolaus, "The risk is that things get much worse than expected."
Source: Agencies
Thursday, January 1, 2009
Will 2009 be worst year for US credit card companies?
US credit card companies have little to celebrate as many analysts brace for 2009 to be one of the worst years on record for consumer credit. Losses for the industry could top $70 billion, but it is hard to predict how bad the pain will be.
US consumers have never before been so deeply in debt. There was nearly $1 trillion of credit and charge card debt outstanding as of October, up more than 25 percent since 2003, according to the US Federal Reserve. That is in addition to $10.54 trillion in mortgage debt.
Unemployment, already at 15-year highs, is expected to rise to its highest levels since the early 1980s, when credit cards were not nearly as widespread. In short, there's more debt than ever and fewer people are able to pay it. "In many ways, we're in uncharted territory," said John Williams, an analyst at Macquarie Research.
Major credit losses are big trouble for Citigroup Inc, Bank of America, and other card issuers such as American Express Co and Discover Financial Services, which have seen their shares lose up to 80 percent of their value in 2008. The United States is not standing idly by.
Citigroup received $45 billion of taxpayers' money in October and November. Bank of America has received $25 billion. American Express, which became a bank holding company, got approval last week to receive $3.4 billion from the taxpayer-funded Troubled Asset Relief Program.
Lenders, seeing potential big losses, are trying to protect themselves by tightening credit availability, which leaves consumers with fewer options. This year's holiday shopping season was the worst since at least 1970, according to a report from the International Council of Shopping Centers. "It is hard to see the light at the end of the tunnel," Williams said.
Nowhere to hide
No credit card company is safe. According to Citigroup analysts, more than one-fourth of the credit card portfolios of Citibank, Bank of America Corp, Capital One Corp, and Discover are subprime, which could lead to further losses.
Meanwhile, American Express is heavily exposed to troubled markets with high default rates such as Florida and California, and JPMorgan Chase & Co has to digest the portfolio of failed savings and loans company Washington Mutual. Together, these six companies hold around 90 percent of the total US outstanding credit card debt.
Citigroup and American Express have said they are tightening lending to mitigate their losses. JP Morgan and Bank of America declined to comment, while Capital One did not return calls seeking comment. Credit card companies have reported increased losses.
Discover, the No 4 US credit card network, posted worse-than-expected results in its fourth fiscal quarter, the first sign of the harsh deterioration of the industry, when the economic downturn picked up steam in October and November. Discover almost doubled the money it set aside to cover credit losses. Analysts said its competitors would likely do the same in coming quarters, leading to lower earnings.
"Things have changed pretty rapidly in the last two months. I'm hopeful that we will see the worst in 2009, but I don't know yet," David Nelms, chief executive of Discover, told media in a recent interview.
Many analysts and credit card executives look at 2009 and remember the beginning of the mortgage crisis in early 2007, when lenders consistently underestimated what was coming up. Said Chris Brendler, analyst at Stifel Nicolaus, "The risk is that things get much worse than expected."
Source: Agencies
US consumers have never before been so deeply in debt. There was nearly $1 trillion of credit and charge card debt outstanding as of October, up more than 25 percent since 2003, according to the US Federal Reserve. That is in addition to $10.54 trillion in mortgage debt.
Unemployment, already at 15-year highs, is expected to rise to its highest levels since the early 1980s, when credit cards were not nearly as widespread. In short, there's more debt than ever and fewer people are able to pay it. "In many ways, we're in uncharted territory," said John Williams, an analyst at Macquarie Research.
Major credit losses are big trouble for Citigroup Inc, Bank of America, and other card issuers such as American Express Co and Discover Financial Services, which have seen their shares lose up to 80 percent of their value in 2008. The United States is not standing idly by.
Citigroup received $45 billion of taxpayers' money in October and November. Bank of America has received $25 billion. American Express, which became a bank holding company, got approval last week to receive $3.4 billion from the taxpayer-funded Troubled Asset Relief Program.
Lenders, seeing potential big losses, are trying to protect themselves by tightening credit availability, which leaves consumers with fewer options. This year's holiday shopping season was the worst since at least 1970, according to a report from the International Council of Shopping Centers. "It is hard to see the light at the end of the tunnel," Williams said.
Nowhere to hide
No credit card company is safe. According to Citigroup analysts, more than one-fourth of the credit card portfolios of Citibank, Bank of America Corp, Capital One Corp, and Discover are subprime, which could lead to further losses.
Meanwhile, American Express is heavily exposed to troubled markets with high default rates such as Florida and California, and JPMorgan Chase & Co has to digest the portfolio of failed savings and loans company Washington Mutual. Together, these six companies hold around 90 percent of the total US outstanding credit card debt.
Citigroup and American Express have said they are tightening lending to mitigate their losses. JP Morgan and Bank of America declined to comment, while Capital One did not return calls seeking comment. Credit card companies have reported increased losses.
Discover, the No 4 US credit card network, posted worse-than-expected results in its fourth fiscal quarter, the first sign of the harsh deterioration of the industry, when the economic downturn picked up steam in October and November. Discover almost doubled the money it set aside to cover credit losses. Analysts said its competitors would likely do the same in coming quarters, leading to lower earnings.
"Things have changed pretty rapidly in the last two months. I'm hopeful that we will see the worst in 2009, but I don't know yet," David Nelms, chief executive of Discover, told media in a recent interview.
Many analysts and credit card executives look at 2009 and remember the beginning of the mortgage crisis in early 2007, when lenders consistently underestimated what was coming up. Said Chris Brendler, analyst at Stifel Nicolaus, "The risk is that things get much worse than expected."
Source: Agencies
Saturday, December 13, 2008
Bank of America to slash 30,000 to 35,000 jobs
Bank of America said it expects to cut 30,000 to 35,000 jobs over the next three years, as it faces a deteriorating economic environment and tries to absorb Merrill Lynch.
The final number could be even higher, analysts say. Charlotte, North Carolina-based Bank of America said it hasn’t yet completed its analysis for eliminating positions, and won’t until early next year. The company and Merrill have about 308,000 employees in total, and the cuts will affect workers from both companies and all types of businesses.
Bank of America is considered one of the country’s healthier banks, and its decision to slash so many jobs illustrates the breadth of the layoffs hitting the United States. The nation lost more than half a million jobs in November alone, and economists expect many more to come. Bank of America’s action is a particularly hard blow for Charlotte, which is also home to the beleaguered Wachovia Corp, a once strong bank that is now being acquired by Wells Fargo & Co. In what amounts to a fire sale. Just three months ago, when the Merrill Lynch deal was announced, Charlotte was dubbed Wall Street South; now, the banking center is being hit as hard as Wall Street and other towns across America, where people go to work in the morning unsure if they will still have a job that night. The announcement of job cuts at Bank of America was hardly unexpected, considering the merger and the wave of job losses seen in the banking industry and in other sectors over the past few months. Bank of America and Merrill Lynch have already eliminated thousands of investment banking jobs over the past year, as have other banks, in an effort to lower costs as they face increasing defaults in mortgages, credit card debt and other loans.
HSBC lays off 193 staffers in India
Foreign lender HSBC has decided to slash 193 jobs in its Indian consumer assets business segment after reviewing its portfolio in the backdrop of the prevailing economic conditions, the bank said. The bank is restructuring its consumer assets business division in the country and has made "every efforts to redeploy the staff," HSBC said. "Some 620 people have been redeployed in suitable positions in the bank and other group entities in India. The leavers have been placed in the bank's priority returners scheme which will give them first preference for suitable jobs that come up in the next year," it said.
Source: Agencies
The final number could be even higher, analysts say. Charlotte, North Carolina-based Bank of America said it hasn’t yet completed its analysis for eliminating positions, and won’t until early next year. The company and Merrill have about 308,000 employees in total, and the cuts will affect workers from both companies and all types of businesses.
Bank of America is considered one of the country’s healthier banks, and its decision to slash so many jobs illustrates the breadth of the layoffs hitting the United States. The nation lost more than half a million jobs in November alone, and economists expect many more to come. Bank of America’s action is a particularly hard blow for Charlotte, which is also home to the beleaguered Wachovia Corp, a once strong bank that is now being acquired by Wells Fargo & Co. In what amounts to a fire sale. Just three months ago, when the Merrill Lynch deal was announced, Charlotte was dubbed Wall Street South; now, the banking center is being hit as hard as Wall Street and other towns across America, where people go to work in the morning unsure if they will still have a job that night. The announcement of job cuts at Bank of America was hardly unexpected, considering the merger and the wave of job losses seen in the banking industry and in other sectors over the past few months. Bank of America and Merrill Lynch have already eliminated thousands of investment banking jobs over the past year, as have other banks, in an effort to lower costs as they face increasing defaults in mortgages, credit card debt and other loans.
HSBC lays off 193 staffers in India
Foreign lender HSBC has decided to slash 193 jobs in its Indian consumer assets business segment after reviewing its portfolio in the backdrop of the prevailing economic conditions, the bank said. The bank is restructuring its consumer assets business division in the country and has made "every efforts to redeploy the staff," HSBC said. "Some 620 people have been redeployed in suitable positions in the bank and other group entities in India. The leavers have been placed in the bank's priority returners scheme which will give them first preference for suitable jobs that come up in the next year," it said.
Source: Agencies
Thursday, December 11, 2008
Barclays to offshore 66 jobs to India
Banking major Barclays has announced plans to offshore 66 jobs from its site in Poole, Dorset, to India, sparking protests by bank employees and worker unions.
The bank said the redundancies were part of 1,100 job losses at Poole announced last year, alongside a decision to farm out some work overseas.
Finance union Unite, however, said that the scope of the job cuts was changing and that the 66 job losses were new.
Unite official Steve Pantak said, "The latest job cuts by Barclays in Poole are very alarming for us. The 66 roles are to be offshored to India. Unite believes that there is now real doubt about the future of Barclays in the Poole area.
"The decision earlier in the year to cancel the new building, coupled with the accelerated winding down of jobs in Barclays House, leads Unite to believe that there is a real threat to the future of all staff in Poole."
Pantak called on the bank to give solid assurances on its "commitment to Poole and the remaining jobs in Barclays House."
Earlier this week, Barclays said that it was cutting more than 100 jobs in Cardiff under plans to outsource work in a department that deals with accounts when a customer dies.
Source: Agencies
The bank said the redundancies were part of 1,100 job losses at Poole announced last year, alongside a decision to farm out some work overseas.
Finance union Unite, however, said that the scope of the job cuts was changing and that the 66 job losses were new.
Unite official Steve Pantak said, "The latest job cuts by Barclays in Poole are very alarming for us. The 66 roles are to be offshored to India. Unite believes that there is now real doubt about the future of Barclays in the Poole area.
"The decision earlier in the year to cancel the new building, coupled with the accelerated winding down of jobs in Barclays House, leads Unite to believe that there is a real threat to the future of all staff in Poole."
Pantak called on the bank to give solid assurances on its "commitment to Poole and the remaining jobs in Barclays House."
Earlier this week, Barclays said that it was cutting more than 100 jobs in Cardiff under plans to outsource work in a department that deals with accounts when a customer dies.
Source: Agencies
Wednesday, November 26, 2008
Will US govt bail out Bank of America next?
US government rescue plan has eased investors’ concerns about Citigroup, but mines lurking in the balance sheets of rivals including Bank of America still tempt shortsellers. Bank of America, the No 3 US bank by assets, has loaded up on mortgages as the world’s largest economy wrestles with the worst housing market since the Great Depression.
The Charlotte, North Carolina-based bank further heightened its exposure to home loans by acquiring Countrywide Financial, the largest US independent mortgage lender and agreeing to buy Merrill Lynch, which owns the world’s largest retail brokerage.
If losses on mortgages and other debt securities mount significantly, the bank may see the ratio of equity to risk-weighted assets, known as Tier-1 capital, dwindle to alarmingly low levels.
“I would expect there are more banks who are in dire straits and more who can expect to be helped,” said Michael Farr, president of investment management company Farr, Miller & Washington in Washington, DC. “The share price makes it look like Bank of America might be next in line,” he said.
Before Monday’s stock market rally, Bank of America shares had lost 52% in November alone, making them the second biggest decliner for the month in the KBW Banks index after Citigroup. Analysts at independent research company CreditSights forecast that in a scenario where the commercial and residential real estate markets really tank beyond banks’ expectations, Bank of America would have a Tier-1 capital ratio of 7.15%.
The minimum that regulators seek to consider a bank “well capitalized” is 6%, but any ratio near or below 7% tends to spook investors. Bank of America declined comment. CreditSights also expressed concern about Wells Fargo, which it said would have a Tier-1 capital ratio of 6.98% under its worst case scenario. Wells Fargo recently agreed to buy Wachovia.
Under the same assumptions, and before the government’s latest investment, Citigroup would have a Tier-1 capital ratio of 8.64%.
American Express CEO for Citi Bank?
Vikram pandit may thank the TINA (there is no alternative) factor for still being in job as Citigroup CEO, as the US government reportedly did not push for his ouster in its rescue package. A day after the mega rescue plan, it has now come out that the authorities discussed whether to replace Pandit as Citi CEO, but there was an disagreement over the issue. A report from a US business daily has said that the name of American Express CEO Kenneth Chenault had emerged as a possible replacement.
Source: Reuters
The Charlotte, North Carolina-based bank further heightened its exposure to home loans by acquiring Countrywide Financial, the largest US independent mortgage lender and agreeing to buy Merrill Lynch, which owns the world’s largest retail brokerage.
If losses on mortgages and other debt securities mount significantly, the bank may see the ratio of equity to risk-weighted assets, known as Tier-1 capital, dwindle to alarmingly low levels.
“I would expect there are more banks who are in dire straits and more who can expect to be helped,” said Michael Farr, president of investment management company Farr, Miller & Washington in Washington, DC. “The share price makes it look like Bank of America might be next in line,” he said.
Before Monday’s stock market rally, Bank of America shares had lost 52% in November alone, making them the second biggest decliner for the month in the KBW Banks index after Citigroup. Analysts at independent research company CreditSights forecast that in a scenario where the commercial and residential real estate markets really tank beyond banks’ expectations, Bank of America would have a Tier-1 capital ratio of 7.15%.
The minimum that regulators seek to consider a bank “well capitalized” is 6%, but any ratio near or below 7% tends to spook investors. Bank of America declined comment. CreditSights also expressed concern about Wells Fargo, which it said would have a Tier-1 capital ratio of 6.98% under its worst case scenario. Wells Fargo recently agreed to buy Wachovia.
Under the same assumptions, and before the government’s latest investment, Citigroup would have a Tier-1 capital ratio of 8.64%.
American Express CEO for Citi Bank?
Vikram pandit may thank the TINA (there is no alternative) factor for still being in job as Citigroup CEO, as the US government reportedly did not push for his ouster in its rescue package. A day after the mega rescue plan, it has now come out that the authorities discussed whether to replace Pandit as Citi CEO, but there was an disagreement over the issue. A report from a US business daily has said that the name of American Express CEO Kenneth Chenault had emerged as a possible replacement.
Source: Reuters
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