Monday, November 05, 2007

Citi Has Found Another $11 Billion....But Has No Plans To Reduce its Dividend level....LOL!

Thank god they don´t cut the dividend.... What a farce.... Maybe they will pimp this at CNBC and try to dance around the $ 11 billion overnight "adjustment" like the former deaf & ingorant CEO Prince. Maybe someone should tell MBIA & Co that their view on billions of CDO´s with only a low single percentage haircut is looking more and more like David Lereah during the years 2003-2006 . Maybe this guy is running their internal "models".......

Gottseidank wrd die Dividende nicht gekürzt......Da kann man natürlich leicht über die 11 Mrd $ an zusätzlichen Abschreibungen hinwegsehen. Es würde mich nicht wundern wenn es die Crew bei CNBC schafft die Dividenstory als Headline zu promoten. Besonders freut mich zudem das der ehemalig taube und ignorante CEO Prince inzwischen Geschichte ist. Evtl. sollte mal einer die letzten Abschreibungen von Citigroup mit denen von MBIA & Co ins Verhältnis setzen. Deren Sicht der Dinge mit Abschreibungen in niedrigen einstelligen Bereich sieht immer mehr wie ein verspäteter Aprilscherz aus . Evtl. ist ja dieser Typen für die Berechnung der Schadenmodelle zuständig.....

Citi announced on Sunday night it was currently facing writedowns of between $8bn and $11bn, on top of the dismal numbers already reported in its Q3 statement.

What is truly shocking, however, is the speed at which these losses have been realised. Barely a month ago, Citi’s pre-Q3 trading statement, warned that it expected to realise $1.3bn on subprime-related writedowns. Which means that figure has now increased at least sixfold. To put it another way, on average Citi’s subprime-linked assets lost more that $2bn in value each week.

Citi has now disclosed it’s estimated total subprime exposure. Of the $55bn total, some $11.7bn is in its lending and structuring business and a staggering $43bn lies in exposures to collateralized debt obligations (CDOs) - huge baskets of mortgage securities.

CDOs have seen prices crash in the past two weeks, as rating agencies have slashed ratings on hundreds of mortgage backed securities. As FT Alphaville reported last week, banks could be expected to reveal more writedowns as the market tanked.

Of the $11.7bn subprime exposure Citi estimates it has in its lending and structuring business, $2.7bn lies in a “warehouse inventory” of unsold CDOs, $4.2bn in actively managed subprime loans intended for securitization and $4.8bn in financing transactions which have subprime collateral.

Of the remaining $43bn exposure, Citi estimates it has $18bn in CDOs: $10bn of which is in high grade tranches, almost $8bn in mezzanine tranches and some $200m in CDO squared structures. The remaining $25bn, says Citi, is in exposure to subprime CDOs through commercial paper. But Citi does not say what issues that CP: whether it is through off balance sheet vehicles, such as SIVs, is unclear.
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7 Comments:

Anonymous Anonymous said...

Yes. A couple of HBs that I am short also continue to pay the dividend even though they both have recently posted BIG losses, albeit mostly due to writeoffs. It is painful to have to pay the dividend.

eh

1:21 AM  
Blogger jmf said...

Moin Eh,

it´s a farce. On the other hand they have to borow the money to pay the dividind or to buy back shares.

This kind of behaviour will soon be so "yesterday"....

There will be a shift away from shareholder to a bondholder friendly management.

1:29 AM  
Blogger jmf said...


Why measuring the extent of subprime’s losses is so difficult

4:10 AM  
Anonymous Anonymous said...

The thing that jumps out is that this is only the subprime related writeoffs. Nothing about ALT-A, conforming, other resi, commercial and property, LBO debt, other paper, bridge etc.

5:25 AM  
Blogger jmf said...

Moin,

good point.

I assume we will see special charges for years to come.

And the analysts will exclude the charges from their estimates etc.

We have seen this before......

But as long as they can pay their dividend..... :-)

5:34 AM  
Anonymous Anonymous said...

Legg Mason's Miller: Buy Financials, Housing Stocks

Hmm.

What a game these markets are.

eh

6:53 AM  
Blogger jmf said...

Moin Eh,


Bill Miller 2006


"Here we clearly made a mistake by initiating positions too early," Miller said. "We were waiting for a significant sell-off to establish positions," he added. "When that sell-off occurred late last year, we jumped in,"


I´ve put also the current portfolio from his "value" fund at the link....

Looks like he is averaging down for 12-18 month now..... :-)

7:02 AM  

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