How The Mighty Have Fallen
November 25, 2008
Citigroup, one of America’s biggest banks, one that has been at the heart of American finances sinces it emergence back in 1812 has hit the ground with a thump, due to the global financial crisis of the moment. A company that only a couple of years ago was worth $ 273 billion, approx £ 181 billion, now finds itself valued at $ 20 billion.
Due to the amount of sub-prime mortgages given to people with poor credit ratings the company has been hit very hard, seeing its share pricing at $ 4.00 compared to the $ 55.00 it was only a couple of years ago.
With the value dropping and uncertainty of the current time it looks like Citigroup will be looking to cut jobs by 52,000, something that was announced earlier this month. Citigroup have 12,000 employees in the U.K.
So what does this all mean, what can be done to save them, can they be saved? Well the U.S Treasury will input $ 20 billion into Citigroup and also the U.S Government has guaranteed $ 306 billion worth of the riskiest loans, so the hope is that this will all help to get the financial giant through the hard times ahead.
For people who have bank deposits with Citigroup in the U.K, they are covered up to £ 50,000 on the Financial Services Compensation Scheme should the bank completely go bust but this seems to be something that is unlikely to happen. Due to the size of the company and the amount of money being pumped into Citigroup it is very unlikely that they will be allowed to go bust, due to what the knock on effect of this happening would have globally.
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