Citigroup, the embattled financial giant, is taking out advertisements in major US newspapers today in an attempt to shore up customer confidence after a downward spiral in its share price raised doubts about its future.
The tactic comes as executives and US government officials huddled in meetings through the weekend to decide whether more radical steps were needed to restore order.
With $2 trillion in assets and 200 million customer accounts in more than 100 countries, Citigroup is one of the world’s most powerful financial institutions. Yet its shares lost 60 per cent of their value in five days as investors questioned whether it can absorb billions more in losses on loans and commercial mortgage investments.
Although governments typically insure depositors’ money, and although Citigroup has access to potentially unlimited funding from the US Federal Reserve or the government’s Wall Street bail-out fund, executives still fear that the bad headlines could cause panic.
The advertising blitz is designed to reassure. The company is running full-page ads that acknowledge “our financial markets have been tested in unprecedented ways”, but argue that the company’s strength is rooted in a broad range of businesses and the expertise of its staff. It says customers can look to Citigroup for “providing stability” and “securing the future”, and concludes: “Now, more than ever, you can feel confident that Citi never sleeps.”
President-elect Barack Obama’s pick of Timothy Geithner, president of the Federal Reserve Bank of New York, as the next treasury secretary has intensified the drama. In his current role, he has responsibility for regulating Wall Street banks, and the New York Fed was involved in talks this weekend on how best to shore up market confidence in Citigroup. Along with current Treasury Secretary Hank Paulson, Mr Geithner held conversations on Friday with Citi’s management about making a public expression of support, or providing a new infusion of government cash.
Other options include the possible ouster of Vikram Pandit, Citigroup’s unloved chief, and more radical surgery such as spinning off divisions or selling the bank. Some analysts said a solution had to be found this weekend, before trading resumes tomorrow.Reuse content