Citigroup Tries to Halt Its Plummeting Share Price
For months, the nation’s largest banks have struggled to regain investors’ trust. In the center of the vortex is Citigroup, whose precipitous stock-market selloff accelerated Thursday, sending shock waves through the financial world.
While the shares of financial institutions that have received billions of dollars from the government have entered a sharp downward spiral recently, the greatest turmoil is setting in around Citigroup, which has lost half its value in just four days. As the shares slumped 26 percent Thursday — even after its largest single investor, Prince Walid bin Talal of Saudi Arabia, raised his stake — the chief executive, Vikram S. Pandit, abruptly called a senior management meeting to be held Friday to consider options for stabilizing the company.
Investors and analysts are pressuring the bank to consider solutions like splitting the company or selling pieces of it. But there is no certainty any major change would happen because the company believes it is financially strong and has ample financing options. Moreover, there are few buyers who would be willing to pay a price that Citigroup would want for its most valuable assets.
The bank lost market value after posting four consecutive quarters of losses, caused by billions in write-downs. Nine of its investment funds have cratered this year. And the bank could face a tsunami of new losses in its once-lucrative consumer loan business as the global economy weakens.
Putin Vows to Avoid a Replay of Past Economic Collapses
Prime Minister Vladimir V. Putin, mindful that Russians have already been traumatized by two financial crises in the last two decades, tried to assure the country on Thursday that it would be able to weather the current one.
In a keynote speech to the governing party congress, Putin announced tax cuts to spur the economy and increased spending on social programs. With the steep fall in the price of oil, the economy has slowed significantly in recent months, and the Russian stock market has plummeted.
“We will do everything in order to prevent a repetition of the collapses of past years in our country,” Putin said. “We will do everything to protect the savings of our citizens in banks, to safeguard the lawful interests of those who invested their own money in the construction of housing, so that there will not be the shocks of 1991 and 1998.”
He was referring to the end of the Soviet Union in 1991 and to the financial crisis of 1998, when Russia defaulted on its debt and drastically devalued the ruble, wiping out many people’s life savings. These events have become touchstones for Putin, who has prided himself on bringing stability and strong growth to the country.
The current crisis, in other words, could be seen as imperiling Putin’s accomplishments. In his speech, he placed blame for the downturn on repercussions from what he suggested were irresponsible American policies, but he said Russia’s financial reserves would help shield the country.
Heiress and Obama Fundraiser Dispels Cabinet Rumors
When Barack Obama was looking for an entree into Chicago’s elite business community, he had the perfect door-opener: Penny S. Pritzker, a billionaire from one of the city’s dynasties.
Pritzker, 49, went on to become the Obama presidential campaign’s national finance chairwoman, raising record-breaking sums. And after he won the election, she was widely reported to be a leading contender for commerce secretary.
But the same business holdings and connections that made Pritzker so vital to Obama’s ability to raise campaign money also came under sharp scrutiny. On Thursday, she released a statement declaring that she would not be a candidate for the job.
“I think I can best serve our nation in my current capacity: building businesses, creating jobs and working to strengthen our economy,” Pritzker said. “It has been my great privilege to serve in the Obama campaign. I look forward to helping our new president in every way possible and am excited about the future under his leadership.”
DVDs, Hollywood’s Profit Source, Are Sagging
Conventional wisdom holds that Hollywood’s fortunes go up when the economy goes down. People still crave entertainment, particularly of the escapist variety, and movies remain within the budgets of most people.
That may prove true this time around, too — ticket sales have been robust in recent weeks — but studio prosperity stopped depending on box-office results a long time ago. DVDs propel profits these days, and there is a creeping dread in the movie capital that buyer interest is plummeting as the global economic crisis worsens.
“Every studio is claiming, ‘We’re OK so far, but we’ve looked at the overall competitive sales data and we have some concerns,’ ” said Amir Malin, a partner at Qualia Capital, a media-focused investment firm with assets that include several large film libraries.
So far, total DVD sales are down by about 4 percent for the year, with most of that weakness coming in October, according to data compiled by Warner Brothers, the largest distributor of DVDs.
The independent tracking service Nielsen VideoScan paints a bleaker picture, reporting a 9 percent drop in overall DVD sales during the third quarter alone and a 22 percent decline in sales of higher-priced new titles, although its data does not include results at Wal-Mart.