Citigroup Inc. (NYSE:C): Time To Re-Think New Strategies

by James Karedelli | Friday, Apr 4, 2014 | 3848 views

Boston, MA, 04/04/2014 (usastockreports) – One of the largest financial services providers, Citigroup Inc. (NYSE:C)  is certainly not going through its good phase. It is grappling through a series of problem that need to be resolved as soon as possible. Off lately, it has created a lot of buzz and stir in the market. Thinking what’s new? Well then, this time it is certainly not for good reasons.

Criminal investigation for fraud

FBI has initiated criminal investigation into a fraud worth $400 million involving Mexican unit of the Citigroup. Citigroup first made the disclosure in February on discovery of fraudulent loans in the Mexican Unit. It was followed by the confirmation of the victim Mexican Oil Services Company, Oceanografia. Bad loans worth millions were extended fraudulently to the company. Investigation initiated by FBI and the Prosecutors hailing from the U.S. is focused to find out internal controls that led to the fraud. They are also probing into links between Citigroup and Its Mexican unit in the fraud scam.

Internal 2015 target: A distant dream

After failing to secure approval of Federal Reserve for its ambitious plan of returning capital to its shareholders, Citigroup is posed up with a great challenge that is nearly impossible to pull off. According to Goldman Sachs, “it is estimated to return $25 billion in capital in the coming two years in order to meet its 2015 target i.e. 10% return on tangible common equity.”

The Fed further aggravated the misery by rejecting the plan of Citigroup pertaining to share buyback and dividend. Citigroup Inc. (NYSE:C) is still to resubmit to the Fed its new capital return plans for consideration and approval. It is still falling short of at least $17 billion from its whooping target of $25 billion. Thus, Company has called on its outgoing chief executive- Gene McQuade to take over the company’s plans to obtain a green signal in next capital plan.

Thus, Citigroup Inc. (NYSE:C) needs to revamp its plans to tackle the newly cropped up problems. Simultaneously, it should also focus on re-strategizing its agenda and business initiatives to make a robust and profitable come back in the market.

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