Citigroup’s earnings this morning could hardly have been worse: a $12.1 billion operating loss, which was reduced to a still-whopping $8.3 billion after counting in gains from selling Citibank Germany. But here’s a datapoint you might have missed: Citi’s book value per share fell 19% in the fourth quarter and 35% in 2008 as a whole to just $14.70. If you needed any further evidence that this is a solvency crisis and not a liquidity crisis, there you go.
Meanwhile, the deckchairs are being rearranged yet again: as if there haven’t been enough management reshuffles already during Vikram Pandit’s troubled tenure as CEO, he’s now "realigning" the company into two units, Citicorp (ah, the memories) and Citi Holdings. According to the press release,
Citi will manage the company consistent with this structure starting immediately, and management reporting will reflect this structure starting with the second quarter of this year.
It’s a wonder that anybody at Citigroup has any time for actual banking these days, between building org charts and mollifying regulators.
As for the question I had about overseas uninsured depositors panicking and pulling their money out, that turns out to have happened only to a relatively modest extent. Floyd Norris was on the conference call:
It looks like customers overseas are less sure of Citi than those at home. Domestic deposits ended 2008 at $290 billion, up 5 percent from the third quarter, But international deposits are falling. They fell by 4% to $484 billion, and are at the lowest level since the end of 2006.” Some of that is currency translation, but some is probably based on worries.
I don’t think a lot of it is currencies: international deposits have been falling steadily all year, from $561 billion in the first quarter. That drop of $77 billion in three quarters is a massive funding gap to fill in this environment, but it’s not a bank run by any means.