Citigroup, once the world's biggest bank by market value, dropped below $US1 in New York trading for the first time as investors lose confidence the shares can recover after more than $US37.5 billion in losses and a government rescue.
Citigroup fell to $US1.03 in afternoon trading on the New York Stock Exchange after reaching 97 US cents earlier on Thursday, marking an 85% decline this year and giving the New York-based company a market value of $US5.5 billion ($8.6 billion). At its peak in late 2006, Citigroup stock was worth $US55.70, for a market value of $US277.2 billion.
Citigroup, run by Chief Executive Officer Vikram Pandit, is now the 184th biggest bank by market value, behind Malaysia's Bumiputra-Commerce Holdings Bhd and Turkey's Akbank TAS, in which Citigroup owns a 20% stake, according to data compiled by Bloomberg.
``You can finally buy Citigroup shares at the dollar store,'' said Diane Garnick, who helps oversee $US354 billion as an investment strategist at Invesco Ltd. in New York. ``The banking industry is about to enter the era of entrepreneurship as the umbrella model fails and companies will position themselves to focus on one niche.''
Citigroup has reported more than $US37.5 billion in net losses during the last five quarters and the US government has provided the company with $US45 billion. Last week, the government agreed to convert the preferred stock it owned in Citigroup to common shares, gaining a 36% stake in the company and boosting Citigroup's buffer against future losses.
Delisting rule
NYSE Euronext, which owns the New York Stock Exchange, has suspended until June 30 a rule that delisted companies trading below $US1 after six months. The change was made to help prevent a wave of delistings after the Standard & Poor's 500 Index fell to a 12-year low.
Citigroup was created by the 1998 combination of Citicorp and Travelers Group Inc., which with a value of $US85 billion was the largest merger in history at the time. The transaction helped persuade the US government to repeal a Great Depression-era law, the Glass-Steagall Act, that prohibited banks that took consumer deposits from engaging in investment-banking activities.
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