Sunday, April 13, 2008

Citigroup's Capital

Reuters: At Citigroup, a big loss is only part of the story

Here is some analyst remark:
And he identified plenty of exposures: $47 billion tied to "structured investment vehicles," $43 billion of leveraged loans to fund corporate buyouts, $29 billion of "super-senior" collateralized debt obligations, $24 billion of subprime mortgages, $21 billion of home equity loans with high loan-to- value ratios, $20 billion of commercial real estate trading assets and $4 billion tied to "monoline" insurers.
Let's see. That is USD 47+43+29+24+21+20+4=188 billion very very risky assets.

What is their equity in comparison?
Goodwill:                    41'204
Other intangible assets: 12'715
Total stockholder's equity: 113'598
Tangible equity: USD 59'679
Now if the risky assets get reduced in value by 32%, that would wipe out the entire equity.
On the other hand, in the good times, C made USD 20 billion profit a year.

BTW, according to Reuters or Google the market cap is still with 122.53 billion quite high in light of the tangible equity and risky assets (thought quite low in comparison to the former earnings power).

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