Investing

Citigroup: Prince Walid bin Talal's Bad Hair Day

Saudi Prince Walid first put money into Citi in 1991. The stock was at about $2 then and trades at closer to $50 now.The man is believed to be Citi’s largest shareholder. He should be happy.

But, that may not be the case. Citi was passed as the world’s largest bank based on market cap by Bank of America. How humilating.

Citi still has 20% more assets than B of A, which makes the market cap figure all the worse.

The news is viewed as an affirmation of B of A CEO Kenneth Lewis’s program to focus on consumer banking, but it is more an indictment of Citi’s plans and execution.Citi’s focus has tended to be on overseas markets and investment and corporate banking.

Citi is still working on building its international footprint. But, some of the deals, like the recent purchase of China’s Guangdong Development Bank are viewed as risky. It is unclear how much bad debt the Chinese bank may have.

Wall St. is not enamoured of Citi’s overseas and corporate banking structure. The median price target among analysts who cover the bank is $55. The stock trades just below $50.

Not exactly a ringing endoresement.

Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.

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