Citigroup’s toxic assets worth of $306 billion
Tuesday, November 25, 2008 at 5:11 am
The US banking behemoth Citigroup has got risky assets worth $306 billion – a figure equivalent to over half the total assets, nearly six times of market value as well as annual revenue, or about 50-times of full-year net profit of all Indian banks together!
In one of the biggest rescue acts in the world’s banking history, Citigroup on Monday (November 24) said that it would get a $40-billion capital infusion as part of a pact reached with the US Government’s Treasury Department — the central bank Federal Reserve and Federal Depository Insurance Corp, the government agency that is often appointed as receiver for failed banks.
As part of the pact, the government would also guarantee Citigroup’s toxic or risky assets worth $306 billion, which are in the form of securities, loans and commitments backed by residential and commercial real estate and other assets.
While ‘hundreds of billion dollars’ has become an oft-repeated figure in the US in the wake of the current crisis, most of them are still untouched levels on most of the parameters for Indian banks. For instance, all the Indian banks taken together have a current market capitalisation as well as full-year revenue of a little over $50 billion each.
Even the total assets of all the Indian banks, at about $580 billion, is estimated to be less than double the size of NRI Vikram Pandit-led Citigroup’s toxic assets. If we consider only private banks in the country, their total assets, at about $150 billion, are only half the size of risky assets with Citi. Besides, the total full-year net profit of all the Indian banks together, at about $6.5 billion is just about two per cent of the toxic assets lying with Citi.
(With inputs from agencies)
( This post is from an independent writer. The opinions and views expressed herein are those of the author and are not endorsed by APakistanNews.Com.)
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