Even a stopped clock is right twice a day, or something. Somehow – more
by luck than judgment, I’m sure – I managed to call this one pretty well.
11:
If Citi can carve off some large chunks of its SIVs, it might be able to
reduce the rump vehicles to something digestible – at which point Citi’s
brand-new CEO can take them onto the bank’s balance sheet as part of his fresh
new strategy or somesuch. But there’s still a fair amount of pruning to go
before that happens: I don’t think Citi can really afford to take anything
like $66 billion of SIV assets onto its balance sheet right now.
13:
Citigroup Inc., badly bruised by mounting losses, is bailing out seven affiliated
investment entities, bringing $49 billion in assets onto its balance sheet
and further denting its capital base.
The bank said it would provide emergency support to the entities, known as
structured investment vehicles, if it can’t find buyers for their short-term
notes…
Yesterday’s move underscores how quickly Vikram Pandit, who was named Citigroup’s
chief executive Tuesday, is moving to tackle the myriad problems facing the
bank.
So Citi’s managed to further prune its SIVs from $66 billion to $49 billion
in the past few days, and is presumably actively seeking to cut them even more
if it can, maybe by dint of taking advantage of the underwhelming MLEC.
How’s Citi going to pay for this? Well, that’s the call I made yesterday –
cutting its dividend, of course. But what are the chances of me being right
twice in two days?