Calculate your site FeedRank Today
FeedRank, a newly developed algorithm for ranking RSS feeds only on RSSMicro
Click here to learn more
 5/10 Good --- thecurrent.theatlantic.com http://feeds.feedburner.com/theatlantic/TZRn
Saturday, April 19, 2008 --- 98 days ago http://thecurrent.theatlantic.com/archives/2008/04/credit-crunch.php
| Citigroup posted a $5.1-billion loss and announced 9000 layoffs. Analysts call it a "kitchen sink quarter." Companies in shell-shocked industries write down everything that even looks like it might go wrong, clearing the balance sheet for future growth. For banking, that quarter was supposed to be the end of last year. Friday's earning report from Citibank, however, indicates that some in the industry might still have faulty plumbing yet to expose. After giant write-downs last quarter, Citibank again announced it needed to revalue its assets sharply downward. The financial giant took massive write-downs across multiple business lines, pushing revenue into negative territory and causing its second consecutive quarterly loss. The bank has now written down almost $40 billion due to the credit crunch. The bank's woes offer snapshots of emerging trends. Its net interest margin -- the difference between its borrowing costs and its lending costs -- actually rose in the first quarter of 2007, thanks to cheap funds from the Federal Reserve. Nonetheless, the attempt to deleverage as quickly as possible cost dearly. Banking may be the only industry in which a CEO could proudly announce that "taken over the last two quarters, assets are down nicely." Fitch has cut the company's credit rating over concerns about the loss, and its future profitability.
Citigroup's own view of its profitability seems hardly more optimistic. The loa ... |
|
|
Recent Posts
|
|
|
Facebook Del.icio.us Digg StumbleUpon Reddit Google
Anytime
