Yet another Wall Street analyst has hammered Citigroup, despite a recent surge in the bank's stock price. Shares in Citigroup have shot up more than 60 percent in the last month.
Citi's recent rally, however, didn't prevent this macabre declaration today from Institutional Risk Analyst (IRA): "In Q2 2009, the queen of the zombie dance party remains Citigroup." Just last week, as NYT's DealBook pointed out, David Trone of Fox-Pitt Kelton predicted that Citi would see an additional $68.6 billion in loan losses through 2010. (Note: Citi's shares took a big dive today.)
Calling the bank "one of the zombie girls still rocking out at the House Bernanke dance party" and saying Citi was "halfway" in the grave," IRA questions why any serious money manager - let alone a Main Street investor - would put their money into Citigroup when so many questions remain about the bank's toxic assets.
According to IRA's Bank Monitor, which examines the health of individual banks, Citigroup is one of 2,256 banks to receive a grade of "F" in the second quarter of this year. In case you needed an explanation of what an "F" signifies, IRA describes this grade as: "Stress levels at the extreme range above industry average. At this degree of stress, one or more of the key elements of the business model has reached failure mode. What concerns exist are probably already public."
Worse, IRA compares Citigroup to some other well-known wards of the state:
"As we told subscribers to the IRA Advisory Service on Monday, credit losses at C could require additional injections of capital a la Fannie Mae and Freddie Mac, even with the flow if subsidies that has increased C revenue greatly from 2008 run rates."
IRA's assessment comes at a time when Citigroup has reportedly complained to the Obama administration's pay czar Kenneth Feinberg that pay limits would force their employees to leave the bank.
And, despite being 34 percent owned by the U.S. government, Citi recently broke the news of a $1.3 billion asset sale with "the least informative announcement ever," according to the NYT's Floyd Norris.
Read the entire story at Institutional Risk Analyst.
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