The rise and fall of Citigroup

Read this article on the latest developments at Citigroup and answer the following questions:

1) How much has the value of CitiGroup fallen in the last 2 years?

2) Identify 3 reasons why Citygroup’s value has fallen so far so fast

3) What changes has Citigroup made in response to the changes it has faced in its external environment?

4) What actions have the US Government taken to assist Citigroup? What reasons can you identify for this response from the US Government?

5) Using the information in the ‘Recent creation” paragraph to create a timeline to describe the changes that Citigroup has undergone since its 1885 foundation.

US rescues ailing Citigroup bank

An update from the BBC on US bank Citigroup. Citigroup's share price has risen 60% today on the news that the US Government has just agreed to

a) Provide $USD20 billion to Citigroup in return for preference shares in the business (a preference share is one that guarantees a fixed dividend)

b) Guarantee up to $306bn of risky loans on Citigroup's financial accounts (remember that banks like Citigroup are blamed for creating the sub-prime loans that are a major cause of the current financial crisis)

The article suggests an economy of scale that we dont often see in a textbook - businesses like Citigroup (and Fanny Mae and Freddir Mac) are seen as "too big to allow to fail".

The recent history of Citigroup

• Shares in Citigroup fell in value by more than 60% last week.



• Citigroup announced an extra 52,000 job losses worldwide (thats on top of 23,000 job cuts they have previously announced)



• Citigroup has lost more than $20bn in the past year because of the global financial crisis, suffering four straight quarterly losses



• Citigroup CEO (Vikram Pandit) and his senior managers have been criticised for failing to fix the banks problems

Citigroup job cull to hit 75,000

The problems faced by Citigroup are described in this BBC article and this one.

Read both articles and answer the following questions
1) As a result of the financial crisis,
a) What are Citigroup’s losses this year?
b) How many workers will lose their jobs at Citigroup?
c) How much has been given to Citigroup by the US Government to ‘bail-out’ the business?
d) How much has Citigroups share price fallen

2) What has Citigroup done to try and restore the bank to profitability?

3) Vikram Pandit was appointed CEO of Citigroup in January 2008. What factors are mentioned on the article(s) for AND against the choice of Mr Pandit for this top job?