Citibank closes at $6.40
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On 10 Dec 2007 - UBS
GIC has committed to subscribe to 11 billion Swiss francs (US$10B) worth of mandatory convertible notes that will pay a coupon of nine percent until conversion into ordinary shares about two years after issuance, UBS said.
http://nicholasmong.com/latest/singapore-to-invest-almost-us10b-in-swiss-bank-ubs/
Jul 31 2008 - Merrill Lynch
US$29 - If BOA's deal is to be believed.
http://afp.google.com/article/ALeqM5i2utZN9Et0f-U1kZR8zBMw51evaA
29 Apr 2008 - Citigroup
the Citi perpetual notes which GIC can hold for as long as it chooses.
http://www.asiaone.com/Business/News/SME%2BCentral/Story/A1Story20080427-62020.html
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I read from Yahoo news.
Citigroup stocks on Thursday closed at 4.71 dollars, their lowest level in 15 years, despite Wednesday's announcement by Saudi Arabian investor Prince Alwaleed bin Talal bin Abdulaziz Al Saud that he would increase his holdings in Citigroup Inc. to 5.0 percent, adding that he supports the banking giant's management.
http://sg.news.yahoo.com/afp/20081121/tts-finance-economy-us-banking-citigroup-972e412.html
AND
Those who devour usury will not stand except as stands one whom the devil by his touch has driven to madness. That is because they say: Trade is like usury: but Allah has permitted trade and forbidden usury.... Allah will deprive usury of all blessing, but will give increase for deeds of charity, for He loves not any ungrateful sinner.... O you who believe, fear Allah and give up what remains of your demand for usury, if you are indeed believers. If you do it not, take notice of war from Allah and His messenger, but if you repent you shall have your capital sums; deal not unjustly, and you shall not be dealt with unjustly. And if the debtor is in difficulty, grant him time tin it is easy for him to repay. But if you remit it by way of charity, that is best for you if you only knew. [Surah al Baqarah, verse 275-280].
http://www.islamic-awareness.org/History/usury.html
Doesn't Islam forbid "Usury"? Then why is a Saudi Arabian Prince investing in an organisation that deals in Usury?
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Islamic finance ??
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citi closed 3.77
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Sovereign Funds Invest Where Buffett Won't: Michael R. Sesit
Commentary by Michael R. Sesit
Jan. 4 (Bloomberg) -- Sovereign wealth funds have been buying up stakes in troubled U.S. and European money-center banks, brokers and other financial institutions at such a rapid pace that you have to wonder: Do they know something other investors don't or are they just spending too much, too fast?
A few months ago, these funds were regarded as the bogeymen of global finance, intent on using their affluence to acquire strategic industries in the West. By year's end, they were its Santa Claus.
In the past two years, sovereign wealth funds and Chinese financial institutions invested at least $77.2 billion in Western banks and money managers. About $66.6 billion of that was placed in the last three quarters of 2007, accelerated by banks' needs for capital infusions after being battered by the subprime- mortgage crisis and related credit crunch.
The bigger deals include Government of Singapore Investment Corp.'s $9.7 billion investment in Switzerland's UBS AG, and Singapore-based Temasek Holdings Pte.'s 18 percent stake in Britain's Standard Chartered Plc for $9.2 billion. The Abu Dhabi Investment Authority paid $7.5 billion for a 4.9 percent holding in Citigroup Inc., while Temasek invested $4.4 billion in Merrill Lynch & Co. with an option to buy an additional $600 million of stock. China Investment Corp. bought $5 billion of Morgan Stanley.
With more than $2.5 trillion in capital, ``not too long ago, these new masters of the universe were more feared than favored,'' says Joseph Quinlan, New York-based chief market strategist at Bank of America Capital Management. By providing badly needed capital to banks and other financial institutions, ``sovereign wealth funds emerged as a source of financial stability rather than instability.''
`Complicated Messes'
Maybe so. But these giant piggy banks aren't charitable institutions.
``We don't know why anyone would want some of these financial institutions, as their franchises aren't worth much; and they have big, complicated messes that won't be fun to try to unravel,'' Ray Dalio, Westport, Connecticut-based president of Bridgewater Associates Inc. with $150 billion under management, said in a late November report.
Many banks make money playing the gap in prices, or spreads, between different securities, currencies and interest rates. These strategies, however, can be replicated without banks' large, expensive overheads. ``We are all competing to create the most efficient portfolios to make our spreads over our cost of funds,'' Dalio said. ``Why would you want a bank as your platform, especially when the quality of portfolio managers working there are those who built the portfolios that yielded these results?''
Bank Managements
The managements of these banks and brokers are nothing to cheer about. Just look at their losses. And by taking minority stakes, opting not to sit on boards and surrendering voting rights -- as they have in several instances -- the funds are betting on the same folks responsible for the red ink.
Bottom line: ``Owning a big American bank is a bit like owning a big American automobile company, or a big American newspaper, or, for that matter, the U.S. dollar,'' Dalio said. ``For all of them, the memory of what it was carries a certain cache that tends to make it trade for more than its real value in the modern world.''
Perhaps the most telling evidence that sovereign funds may be buying pigs in a poke is billionaire Warren Buffett's rebuff to U.S. financial institutions seeking cash infusions. ``So far, we have not seen a deal that causes me to start salivating,'' the chairman of Omaha, Nebraska-based Berkshire Hathaway Inc. said in a Dec. 26 interview on CNBC. Of course, Buffett isn't averse to all banks. Berkshire Hathaway is the biggest shareholder in Wells Fargo & Co. and the second-largest in M&T Bank Corp.
Insurer Ratings
Two days later, the company said it was buying the reinsurance unit of Holland's ING Groep NV and setting up a company to guarantee municipal debt in competition with existing bond insurers struggling to retain their AAA credit ratings.
Sovereign-fund investments have focused on Western financial institutions with large presences in emerging-market economies, strong securities businesses and modern asset-management capabilities, according to Huw van Steenis, head of banking and diversified-financials research for Morgan Stanley in London. Much of the investment is predicated on expectations of growing middle-class wealth, especially in Asia.
Initially, the investments look smart. The stocks are mostly very liquid and cheap. Furthermore, the shares are often sold at large discounts. Temasek purchased Merrill Lynch stock at a 12 percent discount to its share price a week before the investment was announced.
Unknown Losses
Unlike most private-sector fund managers, sovereign funds can also afford to be long-term investors. And being government entities, they aren't required to constantly mark their investments to market.
Even so, the stocks aren't cheap relative to the financial sector's long-term valuation multiples, Dalio said. What's more, Bridgewater says the full extent of bank losses isn't known. ``We also believe that the credit problems that lie beneath the surface are much larger and more threatening than the ones that have surfaced,'' the firm said in a Nov. 21 report.
When a crisis hits, it's almost reflexive for financial institutions to understate losses and postpone acknowledging them.
Nonetheless, ``2008 will likely present the best buying opportunity for high-quality financials in the last decade,'' Lehman Brothers Holdings Inc. said in a Dec. 7 report.
Three problems: One, figuring out which ones are high quality. Two, in July, Lehman was wrong when it said the worst of the global credit-market rout was over. Three, Dec. 7 isn't a very lucky date in American history.
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this article appeared on 4 jan. good read.
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Damn. USD3 plus for a citibank share.
Even cheaper than local bank stocks.
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Citi group's situation is really damn jialat, look at their balance sheet of CDO exposure. Even experts cant figure it out. GIC managers must be damn smart to understand their balance sheet accounts.
If Citi were to fail, global markets will see hell. Confidence all gone.
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Our Giant Loss-making companies listened to Alan Greenspan, get fucked. Then they got smart and don't believe in Warren Buffet, also get fucked!
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Written at the bottom section of my Citibank credit card statement.
With effect from 1 DEC 2008, bills payments will no longer be accepted over our branch banking counters. You will be happy to note that there are many other convenient ways to pay your bills. These include mailed-in cheque using the postage prepaid envelope provided in your monthly statements, Cash Deposit Machines and Quick Cheque Deposit Boxes located at all our branches, AXS Stations located in over 500 locations islandwide, our ATMs, GIRO and Citibank Online using Inbound Funds Transfer.
I think come 30 Nov 2008, there will be more retrenchment of front line tellers.
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Citigroup (C):
Citigroup (C 3.83) reported a massive loss for the fourth quarter and said it was splitting into two businesses, one focused on traditional banking and the other holding riskier assets.
For the quarter, Citi reported a loss of $1.72 per share, $0.41 worse than the First Call consensus that expected a loss of $1.31 per share. Revenues were $5.59 billion.
During the quarter Citi issued $45 billion of preferred stock and warrants to the U.S. Treasury as part of the TARP.
Citigroup said its Tier 1 capital ratio was approximately 11.8%. The bank also added $14 billion to its loan loss reserves.
In a move away from its "financial-services supermarket" model, Citi said it is splitting up into two business, Citicorp and Citi Holdings.
Citicorp will focus on traditional banking business across the globe. The new Citicorp will include the retail bank; the corporate and investment bank; the private bank, which serves wealthy individuals; and global transaction services.
Citi Holdings will include the company's non-core assets, including asset management and consumer finance segments, including CitiMortgage and CitiFinancial. The new unit will also be in charge of Citi's 49% stake in the brokerage joint venture with Morgan Stanley. In addition, Citi Holdings will take a pool of $300 billion of assets including loans and securities backed by residential and commercial real estate, and consumer loans. Those assets are part of a loss sharing agreement Citi has with the government.
Source: Briefing.com
How would this affect our convertible bond arrangement ?
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9% coupon!?
mandatory conversion!?
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my friend was very confident about Citigroup shares.
So he bot many many.
I told him, since its so low now, and based on your earlier judgement,
why not you buy as much as possible of it now?
sure win right?
or are you gambling?
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Citigroup share is now no longer $6.40 as stated in the thread title.
It is now $5.20 SGD ($3.50 USD).
wow, time to snap up ah???!!?
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Citibank GG . he he..
Shell gonna be rethinking about thier previous partnership with Citibank C.C liaw. ho ho ho..
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Originally posted by likedatosocan:
my friend was very confident about Citigroup shares.
So he bot many many.
I told him, since its so low now, and based on your earlier judgement,
why not you buy as much as possible of it now?
sure win right?
or are you gambling?
haha .. im going to be like your friend. i'm going to buy citibank shares now. think it's a good buy. maybe put a few k inside to buy and hold for the next 5 - 10 yrs ;)
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citibank splitting into 2 is imminent. so, which bad half is our dear government will cling to?
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Originally posted by maurizio13:
9% coupon!?
mandatory conversion!?
and if im not wrong must convert above a certain price. US$33 ?
and by the end of this yr... 2009.
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Originally posted by redDUST:
citibank splitting into 2 is imminent. so, which bad half is our dear government will cling to?
if i were them .. i will choose to cling to Citi Holdings :) long term potential.
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Originally posted by maxtor:
if i were them .. i will choose to cling to Citi Holdings :) long term potential.
that's it. you spoil it all....now they will do exactly the opposite. -
Originally posted by maxtor:
haha .. im going to be like your friend. i'm going to buy citibank shares now. think it's a good buy. maybe put a few k inside to buy and hold for the next 5 - 10 yrs ;)
who knows, long term can be any number of years. can even hold for 11-15 years. Like this no scared paper loss.
but I am holding my horses for now. Hoping for it to drop further, drastically. My game plan is to invest all I have when it reaches $1. Erm, not USD 1 dollar. SGD 1 dollar. That is when I pour all my money into citi. not much lah, just 10K sgd. that all i got. sigh.... :( but SGD10K = 10k shares when (if) citi becomes a delicious SGD1. then if it skyrockets back to SGD10 a share, I would be earning 100K or 10 times the investment. So, I kudos the swf for their long term foresight. hee heee.
ps: my long term means any length of time, can be 20 years also. ;)
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Originally posted by likedatosocan:
who knows, long term can be any number of years. can even hold for 11-15 years. Like this no scared paper loss.
but I am holding my horses for now. Hoping for it to drop further, drastically. My game plan is to invest all I have when it reaches $1. Erm, not USD 1 dollar. SGD 1 dollar. That is when I pour all my money into citi. not much lah, just 10K sgd. that all i got. sigh.... :( but SGD10K = 10k shares when (if) citi becomes a delicious SGD1. then if it skyrockets back to SGD10 a share, I would be earning 100K or 10 times the investment. So, I kudos the swf for their long term foresight. hee heee.
ps: my long term means any length of time, can be 20 years also. ;)
liddat also can, meh? -
USD$3.50 is quite worth it. Considering that USD will also appreciate against SGP.
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Just my 2 cents on the current Citibank and Bank of America share prices..
Banking stocks like Bank of America and Citibank are pretty much finished. Their liabilities are over hundreds of billions and even if the US Govt is to backstop them, it would do little to improve their share price. As the US govt pumps more money into these too-big to fail banks, these banks would have to repay a larger debt to the US Govt. This would just wipe out shareholder's equity as banks have an obligation to repay the US taxpayers first for their huge injection before other more subordinated debts. For the shares of these banks to be worth any money, the banks have to earn a few hundred billions in 2009/2010/2011 to repay all the US bailout money.That would be impossible as even in the height of subprime securitization and CDO, these banks were only raking in 30-40 billion a year. Now that their most profitable stream of income has ended, these banks would at most make a few billion a year and it would never be possible to pay the 10+% yield on the massive debt they've incurred in 2008.
These banks are technically "nationalized" now to keep their functions going and prevent a fallout like Lehmans when it collapsed. Also, the US Govt is trying to reduce the sizes of these too-big to fail organizations they've bailed out like AIG, BoA and Citibank so that they can collapse with limited impact to the general economy.
There is very little upside to their equity, and even buying debt is risky as you would not have a clear outlook of 2-3 years on what the US govt are going to do to these organizations. The best bet is to buy short term maturing debts on these banks, i.e 1-2 years and get high yields before the US govt decide to let these organizations collapse or disintegrate in an orderly fashion.
Buying equity at the moment is a very short term investment strategy and you are hoping that the prices jump 3-4 dollars (100-200%) on positive rumours or news, but in the long term the share prices of these companies would not be worth much. Just look at AIG, it's still trading at $1.50+ and slowly shedding its operations. That would be the case of BoA and Citigroup.
I hope people consider these factors before deciding to lunge into an all out buying frenzy of banking shares that seem to be really cheap at knock down prices. There's a reason why it's that cheap, and it's not because market forces are inefficient at the moment.
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Originally posted by ShitSandwich:
Just my 2 cents on the current Citibank and Bank of America share prices..
Banking stocks like Bank of America and Citibank are pretty much finished. Their liabilities are over hundreds of billions and even if the US Govt is to backstop them, it would do little to improve their share price. As the US govt pumps more money into these too-big to fail banks, these banks would have to repay a larger debt to the US Govt. This would just wipe out shareholder's equity as banks have an obligation to repay the US taxpayers first for their huge injection before other more subordinated debts. For the shares of these banks to be worth any money, the banks have to earn a few hundred billions in 2009/2010/2011 to repay all the US bailout money.That would be impossible as even in the height of subprime securitization and CDO, these banks were only raking in 30-40 billion a year. Now that their most profitable stream of income has ended, these banks would at most make a few billion a year and it would never be possible to pay the 10+% yield on the massive debt they've incurred in 2008.
These banks are technically "nationalized" now to keep their functions going and prevent a fallout like Lehmans when it collapsed. Also, the US Govt is trying to reduce the sizes of these too-big to fail organizations they've bailed out like AIG, BoA and Citibank so that they can collapse with limited impact to the general economy.
There is very little upside to their equity, and even buying debt is risky as you would not have a clear outlook of 2-3 years on what the US govt are going to do to these organizations. The best bet is to buy short term maturing debts on these banks, i.e 1-2 years and get high yields before the US govt decide to let these organizations collapse or disintegrate in an orderly fashion.
Buying equity at the moment is a very short term investment strategy and you are hoping that the prices jump 3-4 dollars (100-200%) on positive rumours or news, but in the long term the share prices of these companies would not be worth much. Just look at AIG, it's still trading at $1.50+ and slowly shedding its operations. That would be the case of BoA and Citigroup.
I hope people consider these factors before deciding to lunge into an all out buying frenzy of banking shares that seem to be really cheap at knock down prices. There's a reason why it's that cheap, and it's not because market forces are inefficient at the moment.
And there goes our own billions of dollars, invested none other by Temasek, strongly defended again and again by many heavyweigh Ministers, that it was the right decision. -
Will anyone buy at 5 cents?