Citigroup, is changing its way significantly. Gary Crittenden as the new Chief Financial Officer, is being made responsible to manage all its underperforming and toxic assets. Crittenden has earned the confidence of the financial community. It is a welcome relief for the firm as they want to release these assets as soon as possible.Gary Crittenden along with Vikram Pandit wants to live with the dream to restore the third-largest U.S. Bank even after $38.5 billion in losses over five quarters.
Citigroup is also involved in some financial gymnastics to raise its sunken share price. Citigroup is planning a reverse stock split-equivalent of giving $10 billion to its investors in exchange for split. This lead to a short term rally in the share price of Citigroup since the beleaguered company is earning profits in the first two months of this year. To my view this won’t make a significant change in its fundamental outlook for the company. In financial terms a reverse stock split reduces the number of shares outstanding and therefore the share prices also increases proportionately. This financial housecleaning will also help in the bailout plan to go smoothly.
Credits : Manik Gursahani
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