Citi's stock plunges below the cost of a tissue roll

06 March 2009

Once among the biggest and most admired global banks, Citigroup faced the ignominy of seeing its stock value fall below the $1-mark - below the cost of a tissue roll - for the first time in the bak's history on Thursday, 5 March.

Operating in more than 100 countries and having over 1,400 branches in the US alone, Citigroup's stock fell to 97 cents in late morning trading and hovered to around $1.03 during the near close of the day.

The New York Stock Exchange had last week relaxed its listing rules, where it allows stocks to be traded even if it falls below the $1-mark due to the current unusual market volatility and decline.

So far this year, Citi has lost more than 85 per cent of its market value and had it not been for the US government's financial assistance for the third time in six months, the latest coming late last month, (See: US government to hike Citi stake; Pandit likely to stay as CEO: reports) the bank would surely have collapsed.

Citigroup has received $45 billion in government aid under the financial rescue plan, as well as loan guarantees. Investors are fearful that the slowing economy and balance sheets stuffed with toxic assets could result in the nationalization of the largest and most troubled banks. Spreads on Citigroup credit default swaps rose Thursday.

Late last month, the US said it would convert more that $25 billion of its Citigroup preferred shares into common stock, boosting its ownership stake to as much as 36 per cent. Citigroup also said that it recorded a pre-tax impairment charge of $9.6 billion in the fourth quarter because of deterioration in the financial markets, further widening its 2008 loss. The deal with the government called for three new directors on Citigroup's board. (See: US government to hike Citi stake; Pandit likely to stay as CEO: reports)