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Answered Question

davepamn

M$1 June 02, 2009 02:54 PM

Does Citigroup look debt heavy?

As of 2008, Citigroups balance sheet has $774 billion in deposits, $105 billion in short-term borrowings, $393 billion in long-term debt, and $646 billion in other liabilities, including $250 billion to the Fed and $118 billion in brokerage payables. Shareholder owe $27 billion in Citigroups stock. Citigroup has $500 billion owed to non-depositor unsecure creditors.

Citigroup has about $300 billion in assets. If you measure debt to asset ratio, how to interpret Citigroups financial health?

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dcanswerer

June 02, 2009 03:00 PM

Citigroup is obviously not a healthy company right now. It does owe mountains of debt. That's clearly one of the reasons its stock price is so depressed and why it was removed from the Dow Jones index. In addition, the government owns over a third of Citigroup now.

Obviously, they have not had a good couple of years.

However, I don't think that they are in the same situation as other companies that went under (Bear Stearns, AIG, Lehman, etc). Those companies were having their troubles at the worst possible time for a bank. Deposits were down, withdrawals were up, and there was panic all over the place.

Now, people are starting to put far more money into savings, they're starting to borrow and spend more, and interest rates for savings accounts are extremely low. So if a bank can keep its head above water, it's not a bad time to be in that sector.

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• Suppose, Citibank was a customer seeking a personal loan and using the debt to asset ratio of 30 percent, could they get a loan?

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dcanswerer

June 02, 2009 06:04 PM

Possibly, if they find a generous banker. It'd probably be a pretty high interest rate, but if it's that or bankruptcy, I think they'd take the loan.

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