This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Citigroup: Post-Pandit Glow Winner

Stocks in this article: C JEFF JPM

When the Fed completed its 2012 stress tests in March, investors cheered as many of the nation's largest banks, including JPMorgan Chase, Wells Fargo, and U.S. Bancorp, announced dividend increases and regulatory approval for significant repurchases of common shares. Citigroup's initial capital plan -- which would have included an increased quarterly dividend, as well as share buybacks -- was rejected by the Fed, while a revised capital plan, which included no increased capital return to investors, was approved in August.

This time around, the Fed will allow a much quicker resubmission of revised capital plans for banks whose initial plans are rejected, which according to Barclays analyst Jason Goldberg "would have helped Citigroup and SunTrust (STI) this year."

Goldberg said that the Fed's recent approval for PMorgan Chase to restart its stock repurchase plan with $3 billion in buybacks during the first quarter -- after the buybacks were suspended in the second quarter, after CEO James Dimon first announced the company's hedge-trading losses -- was one of three "positive data points" for banks last week.

Once again, the stress tests are likely to be a positive event for most of the banks involved, and analysts are expecting several of the largest banks to significantly increase their payouts next year. Goldberg said that "over the past year, employment and housing data has improved, while the group has built capital. In fact, if one takes current tier 1 common ratios and applies the haircut used in last year's CCAR process, this lot has over $150bn in excess capital."



In the wake of CEO Vikram Pandit's ouster and replacement with Michael Corbat, investors are looking for a more aggressive approach from Citigroup on the disposition of noncore assets and return of capital. Corbat formerly headed Citi Holdings, which is the subsidiary into which the company placed noncore assets, as part of Pandit's "good bank/bad bank" strategy of right-sizing the company's balance sheet.

Goldberg expects Citigroup in the second quarter of 2013 to increase its quarterly dividend from the current nominal payout of a penny, to 15 cents. The analyst also expects Citi to be granted approval to buy back $2 billion worth of common shares next year.

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,066.84 +36.63 0.20%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs