Security Assignment - Citigroup

Security Assignment - Citigroup (C US)

Company profile/Business Description

Citigroup is a global diversified financial services company operating in more than 160 countries and whose origins date back to 1812. Citigroup has assets totaling approximately $2 trillion and its primary business lines are: Global Consumer Banking, Securities and Banking, and Transaction Services. In addition, Citigroup has a division, Citi Holdings, that is unwinding non-core assets.

Citi has meaningfully reduced the risk of the bank since the crisis by increasing capital and dramatically reducing the level of risky assets, as Citi Holdings has reduced from approximately $900 billion in 2008 to $149 billion currently.Historically, the heavy credit costs in Citi Holdings have taken its toll on the company and have been the primary drag to earnings. However, Citi is well past the turning point on credit costs that we believe will become almost immaterial looking out three to four quarters.

Overview

Many investors are still skeptical of Citigroup: its tendency to find itself at the center of the crisis - from the "less-developed country" crisis in the 1980s to the Enron scandal and subprime meltdown in the 2000s - is certainly reason to adopt a cautious stance with respect to the company's stock. However, there are still reasons for a more optimistic outlook. Since its latest ignominious fall in 2008, Citigroup has recapitalized its balance sheet, scaled back its operations, and installed a new board of directors and management team. In doing so, the bank began to close the operational gap between itself and its more popular peers. Furthermore, Citigroup's global footprint provides opportunities for growth in contrast to competitors with their feet firmly planted in deleveraging developed markets.

Investment Points

* New CEO appears more focused on execution, profitability and returns rather than absolute revenue growth. Executing on cost saves and taking capital out of low...