Citigroup's Board is considering firing its Chief Executive Vikram Pandit, who was appointed as CEO late last year to infuse confidence, as the banking giant finds itself searching for hope all over again.
Replacing Pandit – an enthusiastic defender of the company's existing mix of businesses – is one of the options being considered by Citi executives, along side selling all or part of the company, a public endorsement from the government or a new financial lifeline to stabilise the banking behemoth, after its shares took a sharp plunge this week.
In a series of tense meetings and telephone calls, the executives weighed several options, including whether to replace Citigroup's chief executive Vikram S Pandit or to sell all or part of the company, the New York Times reported.
The paper reported that the company's executives on Friday entered into talks with federal officials about how to stabilise the struggling financial giant.
The report came amidst some analysts saying that infusion of $50 to $100 billion might be needed to bail out the bank.
The course of action, however, remained uncertain on Friday night, the people involved in talks were quoted as saying, and other options may yet emerge. But after a year of gaping losses and an accelerating decline in share price, Citigroup, which has $2 trillion in assets and operations in scores of countries, is running out of time, analysts were quoted by The New York Times as saying.
The paper said, Citigroup's management and some board members held several calls with Henry M Paulson Jr, the Treasury secretary, and with the president of the Federal Reserve of Bank of New York, Timothy E Geithner, who later emerged as President-elect Barack Obama's choice to be Treasury secretary.
Source: PTI
Saturday, November 22, 2008
U.S. Government may rescue Citigroup
The U.S. government may step in to rescue Citigroup Inc. after a crisis in confidence erased half the bank’s stock-market value in three days, according to investors and analysts.
Citigroup’s $2 trillion of assets dwarfs companies such as American International Group Inc. that got support from the U.S. government this year. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke may favor a rescue to avoid the chaotic aftermath of Lehman Brothers Holdings Inc.’s bankruptcy in September.
“Citi is in the category of ‘too big to fail,’” said Michael Holland, chairman and founder of Holland & Co. in New York, which oversees $4 billion. “There is a commitment from this administration and the next to do what it takes to save Citi.”
One option is for the Federal Reserve and U.S. Treasury to create a special vehicle to purchase bad assets from Citi. The Fed has already erected several such funds, such as the Commercial Paper Funding Facility, to provide liquidity to the financial system. Typically, the Treasury would provide some first-loss equity or insurance fee, such as $50 billion provided to the CPFF, to protect the central bank and give the fiscal authority a stake.
The arrangement allows the Fed to leverage the money provided by the Treasury with loans, enabling the purchase of assets worth a multiple of the money. Funding the purchases with loans makes them less onerous to the U.S. budget.
To read more...click on the link below
http://www.bloomberg.com/apps/news?pid=20601087&sid=acxKsnU5HOAI&refer=home
Citigroup’s $2 trillion of assets dwarfs companies such as American International Group Inc. that got support from the U.S. government this year. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke may favor a rescue to avoid the chaotic aftermath of Lehman Brothers Holdings Inc.’s bankruptcy in September.
“Citi is in the category of ‘too big to fail,’” said Michael Holland, chairman and founder of Holland & Co. in New York, which oversees $4 billion. “There is a commitment from this administration and the next to do what it takes to save Citi.”
One option is for the Federal Reserve and U.S. Treasury to create a special vehicle to purchase bad assets from Citi. The Fed has already erected several such funds, such as the Commercial Paper Funding Facility, to provide liquidity to the financial system. Typically, the Treasury would provide some first-loss equity or insurance fee, such as $50 billion provided to the CPFF, to protect the central bank and give the fiscal authority a stake.
The arrangement allows the Fed to leverage the money provided by the Treasury with loans, enabling the purchase of assets worth a multiple of the money. Funding the purchases with loans makes them less onerous to the U.S. budget.
To read more...click on the link below
http://www.bloomberg.com/apps/news?pid=20601087&sid=acxKsnU5HOAI&refer=home
Obama offers massive job-creation plan
President-elect Barack Obama on Saturday offered an outline of his economic recovery plan and jobs were the top priority.
American workers will rebuild the nation's roads and bridges, modernize its schools and create more sources of alternative energy, creating 2.5 million jobs by 2011, Obama said in the weekly Democratic address, posted on his Web site.
"These aren't just steps to pull ourselves out of this immediate crisis," he said. "These are the long-term investments in our economic future that have been ignored for far too long."
Details of the plan are still being worked out by his economic team, Obama said, but he hopes to implement the plan shortly after taking office January 20.
He referred to figures out this week showing that new home purchases in October were the lowest in 50 years, and that 540,000 new unemployment claims had been filed -- the highest in 18 years.
"We must do more to put people back to work and get our economy moving again," he said. More than a million jobs have been lost this year, he said, and "if we don't act swiftly and boldly, most experts now believe that we could lose millions of jobs next year."
The plan will be aimed at jump-starting job creation, Obama said, and laying the foundation for a stronger economy.
To read on...click on the link below
http://www.cnn.com/2008/POLITICS/11/22/obama.economy/
American workers will rebuild the nation's roads and bridges, modernize its schools and create more sources of alternative energy, creating 2.5 million jobs by 2011, Obama said in the weekly Democratic address, posted on his Web site.
"These aren't just steps to pull ourselves out of this immediate crisis," he said. "These are the long-term investments in our economic future that have been ignored for far too long."
Details of the plan are still being worked out by his economic team, Obama said, but he hopes to implement the plan shortly after taking office January 20.
He referred to figures out this week showing that new home purchases in October were the lowest in 50 years, and that 540,000 new unemployment claims had been filed -- the highest in 18 years.
"We must do more to put people back to work and get our economy moving again," he said. More than a million jobs have been lost this year, he said, and "if we don't act swiftly and boldly, most experts now believe that we could lose millions of jobs next year."
The plan will be aimed at jump-starting job creation, Obama said, and laying the foundation for a stronger economy.
To read on...click on the link below
http://www.cnn.com/2008/POLITICS/11/22/obama.economy/
Grim economic situation, says Hu Jintao
Chinese President Hu Jintao has warned the outlook for the world economy was not looking good, but that continued strong growth in China could help serve as a global buffer.
"The situation is very grim," Hu told world business leaders gathered in the Peruvian capital ahead of an Asia-Pacific economic summit.
"The sound and steady growth of the (Asia-Pacific) economy is threatened by the grim world economic situation."
Hu stressed that China's main contribution to world efforts to address the global financial crisis was to maintain steady economic growth at home.
"The steady and relatively fast economic development in China is in itself a major contribution to upholding international financial stability and promoting world economic development," he said.
China's growth, which soared by more than 11 per cent last year, slowed to 9.0 per cent in the third quarter this year, dragged down by economic slowdowns in key export markets such as the United States, Europe and Japan.
China has put together a four trillion yuan (586 billion dollar) stimulus package to shore up the economy, which for years had shown no signs of letting up as the country turned into the world's manufacturing hub.
China has repeatedly said it must focus resources on maintaining domestic growth amid rising expectations overseas that its 1.9 trillion dollars in foreign exchange reserves could be put to use fighting the world financial
woes.
However, Hu vowed China would step up its activity on the international financial scene. China "will play a more active role in international economic cooperation," he said, without offering details.
Source; Agencies
"The situation is very grim," Hu told world business leaders gathered in the Peruvian capital ahead of an Asia-Pacific economic summit.
"The sound and steady growth of the (Asia-Pacific) economy is threatened by the grim world economic situation."
Hu stressed that China's main contribution to world efforts to address the global financial crisis was to maintain steady economic growth at home.
"The steady and relatively fast economic development in China is in itself a major contribution to upholding international financial stability and promoting world economic development," he said.
China's growth, which soared by more than 11 per cent last year, slowed to 9.0 per cent in the third quarter this year, dragged down by economic slowdowns in key export markets such as the United States, Europe and Japan.
China has put together a four trillion yuan (586 billion dollar) stimulus package to shore up the economy, which for years had shown no signs of letting up as the country turned into the world's manufacturing hub.
China has repeatedly said it must focus resources on maintaining domestic growth amid rising expectations overseas that its 1.9 trillion dollars in foreign exchange reserves could be put to use fighting the world financial
woes.
However, Hu vowed China would step up its activity on the international financial scene. China "will play a more active role in international economic cooperation," he said, without offering details.
Source; Agencies
General Motors will idle plants; Awaiting U.S. aid decision
General Motors Corp., under pressure after Congress delayed action on automaker aid, is idling four plants for an additional week, extending the shutdown of an engineering center and returning some corporate jets.
The closure of a truck factory in Oshawa, Ontario, is also being moved up by two months to May 14, Tony Sapienza, a spokesman for Detroit-based GM, said yesterday. The plants that will have the extra shutdown week in January are in Michigan, Ohio, Kansas and Missouri.
GM, which has said it may run short of operating cash by the end of this year, acted a day after Democratic leaders in Congress put off deciding on loans to automakers until next month. Congressional leaders want GM, Ford and Chrysler LLC to make a case for the help.
``At this point, GM is not thinking about 2015, they are thinking about 2009,'' said Mike Robinet, an analyst at CSM Worldwide Inc. in Northville, Michigan. ``Ninety percent of their decisions are focused on what they need do to bolster revenue and save cash.''
To read on ...click on the link below:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a0ZU61nc9TH0&refer=home
The closure of a truck factory in Oshawa, Ontario, is also being moved up by two months to May 14, Tony Sapienza, a spokesman for Detroit-based GM, said yesterday. The plants that will have the extra shutdown week in January are in Michigan, Ohio, Kansas and Missouri.
GM, which has said it may run short of operating cash by the end of this year, acted a day after Democratic leaders in Congress put off deciding on loans to automakers until next month. Congressional leaders want GM, Ford and Chrysler LLC to make a case for the help.
``At this point, GM is not thinking about 2015, they are thinking about 2009,'' said Mike Robinet, an analyst at CSM Worldwide Inc. in Northville, Michigan. ``Ninety percent of their decisions are focused on what they need do to bolster revenue and save cash.''
To read on ...click on the link below:
http://www.bloomberg.com/apps/news?pid=20601087&sid=a0ZU61nc9TH0&refer=home
Mike Duke new Wal-Mart Chief
Wal-Mart made the announcement that Mike Duke, the head of its international division, will replace H. Lee Scott Jr. as chief executive of the world's largest retailer next year as its foreign business continues to grow rapidly in scale and importance.
Duke has led Wal-Mart's foreign operations since September 2005 and oversees operations in more than a dozen countries and global procurement, crucial experience as the Bentonville, Ark.-based retailer that began as a five-and-dime looks overseas to fuel its growth. Duke is also expected to continue Scott's initiative to transform Wal-Mart into a more sustainable business, and he helped lead a meeting last month with 1,000 vendors in China to announce new sourcing standards.
To read on ...click on the link below:
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/21/AR2008112101060.html?hpid=moreheadlines
Duke has led Wal-Mart's foreign operations since September 2005 and oversees operations in more than a dozen countries and global procurement, crucial experience as the Bentonville, Ark.-based retailer that began as a five-and-dime looks overseas to fuel its growth. Duke is also expected to continue Scott's initiative to transform Wal-Mart into a more sustainable business, and he helped lead a meeting last month with 1,000 vendors in China to announce new sourcing standards.
To read on ...click on the link below:
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/21/AR2008112101060.html?hpid=moreheadlines
Friday, November 21, 2008
Financial crisis hits Russia hard
Russia had convinced itself -- and the outside world -- that its huge oil wealth and vast foreign exchange reserves made it much less vulnerable than others to the global financial crisis.
But after weeks of virtual silence by state media about the effects the crisis has had on Russia, President Dmitry Medvedev has suddenly acknowledged the extent of the damage.
"In all likelihood, the crisis is going to spread. Here we have to face reality," he said.
Top bankers and businessmen say Medvedev's words amounted to an official acknowledgement of what they have sensed in recent weeks -- a sudden, dramatic slowdown of the economy as credit dried up, sales slumped and factories laid off staff.
"We had thought that Russia would be far less badly hurt by the crisis than other major economies," said one leading Russian banker, speaking on condition of anonymity.
"Now it is clear that Russia will be much worse affected by the crisis than other major economies and will be affected for much longer."
The government is still officially predicting growth of 6.7 percent next year but the World Bank this week halved its growth forecast for Russia to 3 percent and many businessmen and bankers say privately growth will be at best zero.
Underlining the fresh sense of urgency felt in the government, Prime Minister Vladimir Putin on Thursday announced a $20-billion package of tax cuts and extra spending to help pensioners, companies and the unemployed. This was on top of $200 billion of financial aid already pledged by the Kremlin.
To read more click on the link below
http://www.reuters.com/article/reutersEdge/idUSTRE4AK4L620081121?pageNumber=2&virtualBrandChannel=0
But after weeks of virtual silence by state media about the effects the crisis has had on Russia, President Dmitry Medvedev has suddenly acknowledged the extent of the damage.
"In all likelihood, the crisis is going to spread. Here we have to face reality," he said.
Top bankers and businessmen say Medvedev's words amounted to an official acknowledgement of what they have sensed in recent weeks -- a sudden, dramatic slowdown of the economy as credit dried up, sales slumped and factories laid off staff.
"We had thought that Russia would be far less badly hurt by the crisis than other major economies," said one leading Russian banker, speaking on condition of anonymity.
"Now it is clear that Russia will be much worse affected by the crisis than other major economies and will be affected for much longer."
The government is still officially predicting growth of 6.7 percent next year but the World Bank this week halved its growth forecast for Russia to 3 percent and many businessmen and bankers say privately growth will be at best zero.
Underlining the fresh sense of urgency felt in the government, Prime Minister Vladimir Putin on Thursday announced a $20-billion package of tax cuts and extra spending to help pensioners, companies and the unemployed. This was on top of $200 billion of financial aid already pledged by the Kremlin.
To read more click on the link below
http://www.reuters.com/article/reutersEdge/idUSTRE4AK4L620081121?pageNumber=2&virtualBrandChannel=0
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