Comments on: Citigroup to Separate Card Business http://www.nakedcapitalism.com/2008/03/citigroup-to-separate-card-business.html Mon, 23 Nov 2009 00:58:00 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: CrocodileChuck http://www.nakedcapitalism.com/2008/03/citigroup-to-separate-card-business.html#comment-6123 CrocodileChuck Mon, 31 Mar 2008 07:32:00 +0000 http://www.nakedcapitalism.com/2008/03/citigroup-to-separate-card-business/#comment-6123 Yves<br/><br/>As a management consultant working in retail banking, I concur 100% with your point on overhead cost allocation!<br/><br/>Keep up the great work-we all owe you for your focus, bandwidth and critical analysis: Thank you!<br/><br/>CrocodileChuck Yves

As a management consultant working in retail banking, I concur 100% with your point on overhead cost allocation!

Keep up the great work-we all owe you for your focus, bandwidth and critical analysis: Thank you!

CrocodileChuck

]]> By: Yves Smith http://www.nakedcapitalism.com/2008/03/citigroup-to-separate-card-business.html#comment-6122 Yves Smith Mon, 31 Mar 2008 07:25:00 +0000 http://www.nakedcapitalism.com/2008/03/citigroup-to-separate-card-business/#comment-6122 CrocodileChuck,<br/><br/>I have no doubt you are correct. My impression is that Citi hasn't managed that business aggressively, which may turn out to be a blessing in disguise (ie, they may not be quite as heavily exposed to bad credits). But they also may not have managed the cost side well, particularly, as indicated in the announcement, it was part of retail banking with funny overhead allocations (big banks have an enormously hard time understanding their economics. It's a full employment act for consultants, that is, when the banks can afford them).<br/><br/>As a customer I have noticed 1. Their service reps are better than other card issuers (which of course can be turned around, that means they haven't outsourced to India enough), 2. They are the only card issuer (save Amex, where I am also already a customer and which has higher credit requirements than other issuers) that doesn't stuff up my mailbox with offers for new cards with special intro rates. So my only evidence is anecdotal, but maybe they didn't go as crazy on signing up everyone and anyone as the other issuers. CrocodileChuck,

I have no doubt you are correct. My impression is that Citi hasn’t managed that business aggressively, which may turn out to be a blessing in disguise (ie, they may not be quite as heavily exposed to bad credits). But they also may not have managed the cost side well, particularly, as indicated in the announcement, it was part of retail banking with funny overhead allocations (big banks have an enormously hard time understanding their economics. It’s a full employment act for consultants, that is, when the banks can afford them).

As a customer I have noticed 1. Their service reps are better than other card issuers (which of course can be turned around, that means they haven’t outsourced to India enough), 2. They are the only card issuer (save Amex, where I am also already a customer and which has higher credit requirements than other issuers) that doesn’t stuff up my mailbox with offers for new cards with special intro rates. So my only evidence is anecdotal, but maybe they didn’t go as crazy on signing up everyone and anyone as the other issuers.

]]> By: CrocodileChuck http://www.nakedcapitalism.com/2008/03/citigroup-to-separate-card-business.html#comment-6120 CrocodileChuck Mon, 31 Mar 2008 07:07:00 +0000 http://www.nakedcapitalism.com/2008/03/citigroup-to-separate-card-business/#comment-6120 Yves<br/><br/>Think Citi's card business has languished over the last few years. Sounds like they're dressing it up for a trade sale. Unfortunately, the 'reorg' (within Citi this used to be called 'The Wheel') has all the markings of <br/>'deck chair rearrangement on the Titanic'.<br/><br/>CrocodileChuck Yves

Think Citi’s card business has languished over the last few years. Sounds like they’re dressing it up for a trade sale. Unfortunately, the ‘reorg’ (within Citi this used to be called ‘The Wheel’) has all the markings of
‘deck chair rearrangement on the Titanic’.

CrocodileChuck

]]> By: Anonymous http://www.nakedcapitalism.com/2008/03/citigroup-to-separate-card-business.html#comment-6119 Anonymous Mon, 31 Mar 2008 06:49:00 +0000 http://www.nakedcapitalism.com/2008/03/citigroup-to-separate-card-business/#comment-6119 Citi news: At this point it looks like the bank is marginally overcapitalized. As it points out in its annual report, "To be 'well capitalized' under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 Capital Ratio of at least 6%, a Total Capital Ratio of at least 10%, and a Leverage Ratio of at least 3%." According to that report, it has a Tier 1 ratio of 7.12%, a total capital ratio of 10.7%, and a leverage ratio of 4.03%.<br/><br/>Whitney: Citi to cut dividend again<br/>Analyst predicted the bank's first cut, but has she stumbled with latest prediction? Citi news: At this point it looks like the bank is marginally overcapitalized. As it points out in its annual report, “To be ‘well capitalized’ under federal bank regulatory agency definitions, a bank holding company must have a Tier 1 Capital Ratio of at least 6%, a Total Capital Ratio of at least 10%, and a Leverage Ratio of at least 3%.” According to that report, it has a Tier 1 ratio of 7.12%, a total capital ratio of 10.7%, and a leverage ratio of 4.03%.

Whitney: Citi to cut dividend again
Analyst predicted the bank’s first cut, but has she stumbled with latest prediction?

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