Financial Business Review: Citibank Raises Capital, JPMorgan Doesn’t Value Experience

As a part of Citigroup’s (NYSE:C) program to raise capital to meet Tier I requirements, the company divests a 10.1 percent investment in Turkey’s Akbank (AKBTY.PK) for $1.15 billion. However, Citi will retain a 9.9 percent stake for three years, and will take a $243 million loss, post-tax, on the deal, since it acquired the 20 percent for $3.1 billion in 2007.

There seems to be no substitute for experience, as it’s now revealed that the three board members who oversaw risk at JPMorgan (NYSE:JPM) had little of it, so far as managing financial institutions goes. Further, it seems that JPM is the only one of the Too Big To Fail Club whose risk committee had no one with closer industry ties.

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S&P has cut the ratings on five banks in Spain, but Banco Santander SA (NYSE:STD) wasn’t among them. Spain might mimic Greece, in that the banks there are facing possible large scale deposit withdrawals, as they have some €85 billion of maturing debt in the second and third quarters. More long term refinancing operations borrowing might be problematic, as they have little collateral left for such purposes. By the way, Santander does remain on “CreditWatch with negative implications”.

If acquired, Hudson City Bancorp (NASDAQ:HCBK) might bring a 31 percent windfall over its current price, says Matt Kelley of Stern Agee, although a buyer “could take substantial liability marks”. New York Community Bancorp (NYSE:NYB) is said (more than once) to be a possible suitor.

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