This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Citigroup, BofA Shrug Off Report

NEW YORK ( TheStreet) -- Citigroup (C - Get Report) and Bank of America (BAC - Get Report) shares were higher in early trading Wednesday, despite a front-page report in The Wall Street Journal that said those banks, along with Deutsche Bank (DB - Get Report), "were among the most active" at temporarily reducing debt levels before the end of the quarter, obscuring some of the risks on their balance sheets.

Nearly all large U.S. banks opened higher Wednesday, but Citigroup and Bank of America were among the highest. Bank of America shares were up 2.45% 10 minutes before the open, and Citigroup was up 4.76%. An upgrade from Oppenheimer may also have contributed to the momentum in Citigroup shares. Goldman Sachs (GS - Get Report), JPMorgan Chase (JPM - Get Report) and Morgan Stanley (MS - Get Report) were all up by a smaller margin even though the Journal's report stated that those banks have not regularly cut short-term borrowing ahead of the end of each quarter. Deutsche Bank shares, which like other European banks have been hit hard in recent weeks due to the debt crisis in that region of the world, were down slightly.

Citigroup may have gotten a lift from a report in the Financial Times that said that the Qatar Investment Authority is considering buying some of the U.S. Treasury Department's 27% stake in Citigroup. Also, because Citigroup and Bank of America saw their shares sell off more steeply than other large banks during the crisis, their shares generally jump highest when the market is in rally mode, as it was early Wednesday.
Don't Miss
Citigroup, BofA to Sextuple by 2015?

Drawing on Federal Reserve data, the newspaper reported that the three banks reduced borrowing in the repurchase market by an average of 41% over 10 quarters. The repurchase or "repo" market, where banks put up securities as collateral to get quick access to funds, is one of the riskiest types of borrowing because it is so short term. If investors begin to panic and markets seize up, banks that rely too heavily on this market can suddenly find themselves in a funding crisis, as occurred with Bear Stearns and Lehman Brothers during the 2008 crisis.

Reducing short-term borrowing ahead of the end of a quarter does not appear to be illegal, though the Securities and Exchange Commission is considering new rules that would require increased disclosure of such practices, according to the Journal report.

-- Written by Dan Freed in New York.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $15.69 2.02%
C $51.16 2.57%
DB $28.20 3.91%
GS $180.70 2.08%
JPM $62.02 1.99%


Chart of I:DJI
DOW 16,776.43 +304.06 1.85%
S&P 500 1,987.05 +35.69 1.83%
NASDAQ 4,781.2640 +73.4890 1.56%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs