Credit Card Review Blog

Citigroup The Giant: Is this a good thing or a bad thing?

Citigroup The Giant: Is this a good thing or a bad thing?

Citigroup’s chief Chuck Prince warned that things at his bank would get “complicated” if anything fell out of place within the economy. Well, things did fall out of place. So, what does that mean for Citigroup?

In past years, Citigroup fought against other huge bank corporations to be the biggest. How were they competing? Each was trying to see if it could get larger by offering more loans. These loans were issued to risky consumers. Risky consumers equal risky loans. Risky loans ended up attacking smaller banks. What has our economy been left with? Huge banking corporations that are way too big,

Citigroup has tried and failed to join up with smaller banks in effort to boost deposits and make both sides more financially sound. Citigroup hasn’t given up. Instead, it continues to seek for smaller banks to team up with. However, Citigroup has missed the boat. September was the perfect time to join alliances.

The list of ‘cheap’ banks has drastically dwindled. Citigroup is already the third-largest American bank. They want to be bigger and better. Buying several smaller banks won’t work as well as teaming up with a larger-small bank.

Citigroup faces three major challenges.
#1-Economists wonder whether the $25 billion infusion will be enough to get Citigroup out of its slump.
#2-Credit cards losses will continue as the weakened economy tried to rebuild. Credit cards provide 23 percent of Citigroup’s net income.
#3-Citigroup has over $70 billion in risky loans. This makes a shaky and troubled loan portfolio for the banking giant.

If Citigroup wants to stay afloat it needs to seek help from the government. Putting together last-minute acquisitions is not going to solve any of Citigroup’s problems. The bailout plan may be the only way for the company to start rebuilding its portfolio and its reputation.