US banking giant Citigroup on Friday, January 16th announced to split the firm into two after suffering a loss for five consecutive quarters. The firm has recorded a loss of $8.29 billion in the last quarter.
The firm is now splitting into Citicorp and Citi Holdings where the former will look after the traditional banking across the world and later would focus on the company's riskier assets and tougher-to-manage ventures.
CEO of Citigroup, Vikram Pandit has taken the move to reduce the operating costs and spin off the assets of Citi Holdings to raise cash. The firm also wants to focus on the raising deposits and lending.
This step seemed to lead a wary amongst the domestic investors when the market opened on Monday. Investors hesitated trading in banking and financial services companies. Banking majors including like State Bank of India (SBI), HDFC, ICICI Bank, Punjab National Bank (PNB), others were all trading in a restricted range. SBI share was up 1.2% at Rs 1,179.95 while HDFC and PNB were up 1.5% at Rs 950.9 and up1% at Rs 459.80 respectively. ICICI Bank was down 1.5% at Rs 417.40.
During the same quarter in the last fiscal, Citigroup was rescued by the US government in a bail-out deal totaling $ 45billion. At that time, the firm's revenues were down 13% to $5.6 billion.
However this time also the investors were expecting Citigroup's numbers to be bad, "but they were surprised it's this bad," said an analyst from the industry.