Citi's Focusing on the Markets It Can Win

Citigroup's (C - commentary - Trade Now) making all the right moves. It knows it can't get critical mass in so many cities, so it is shrewdly cutting back on markets where it doesn't have share.

How smart is that? I understand that Citigroup hasn't made the announcement yet -- only the press has -- but nobody breaks a story like this without some basis in fact.

Not that long ago I met with the ING (ING - commentary - Trade Now) team when they decided to make America a priority. They had global ambitions, but they said that banking is a local affair. The reasons? Until you have scale, there's no reason to buy up local media, which is expensive if you only have a couple of stores. Vernon Hill, the founder of Commerce Bancorp, often said the same thing to me: Don't build out the branches unless you can dominate.

Citigroup loses one more distraction with this move. These cities would never mean anything for Citigroup other than headaches. Why not get rid of them?

Citigroup also tips the scales to more than 50% international with this move. It simply should not be viewed as one more domestic bank. It never shrank when everyone else did, and now it is the local bank of choice for many areas around the world.

Citigroup's Vikram Pandit is doing an excellent job with a hand almost as bad as AIG's (AIG - commentary - Trade Now). This is a sound decision. As have been almost all the bank's decisions in 2009.

The stock deserves to be higher.

Random musings: Goldman is out with gutsy homebuilding call for certain. Meritage (MTH - commentary - Trade Now) should be bought. ... I like this A123, as I said on the show. ... I didn't think Bed Bath & Beyond (BBBY - commentary - Trade Now) was as bad as the analysts thought, especially the Credit Suisse guy who downgraded it. There are a lot of negative people on the stock despite its excellent execution. They are all worried, sub rosa, about the end of the Linens & Things share take. They have fought it all the way. ... Now what do we do if we bought Electronic Arts (ERTS - commentary - Trade Now) like dopes? Sell it, of course. ... Semi equipment stocks are very strong.

At the time of publication, Cramer was long Goldman Sachs.

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