Chillin' out till it needs to be funded
Lesser Loan Losses lean on lesser banking mortals (possibly sung to the sixth sheikh’s… OR Betty and the buitter butter ) as JPM and Citi survive on nearly $2 billion each from reductions in Loan Loss reserves added year on year, Citi got a fresh green signal for its near complete restructuring from the markets as it does continue to try and sell other bits and pieces from the bad bank or smaller divisions internationally looking to cement a comeback trail for itself. As the only universal bank model with investments in technology and business model innovation, Citi is still paying for profligacy and a flurry of deals gone bad when it chose to warehouse all the wrong deals in the last decade as it came behind the curve on GS and JP Morgan in serving Alt A markets
In fact Lesser loan losses could still last the rest of 2010 but Citi would be among the ones which would have used TARP cash and come out smiling with almost all Treasury stock ( the one owned by the government ) and not the defaulters waiting to pay their TARP instalments or the banks that chose to sell off profitable international businesses to move with the government in step.
JP Morgan meanwhile did struggle during Q2 as investment banking volumes kept going south in the ongoing deleveraging in the US. The corporate and trading business would need investor and regulated hedge fund interest to survive, while investment banking mandates may not substitute for 2007 business volumes. citi also reported subdued business volumes of $20.7 bln
Fortunately, Citi remains insulated from the new Basel norms that have hit Deutsche Bank and others refinancing in the inter bank market. It is also lesser involved in the foreclosure imbroglio having reported only $200 million in realised losses in 2010. Strangely though we do not see any room for the management’s comments on possible buyback in 2011 ( See WSJ)
Up ahead for CITI: EMI does not want to let them get away too easy..