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 Says it Doesn't Hold Treasuries Due on Oct 31

NEW YORK (TheStreet) --Citigroup said on Tuesday it no longer holds Treasury securities with a maturity date of October 31 or earlier, when a possible standoff on raising the federal debt ceiling risks plunging the United States government into a state of default.

The comments, made by Citigroup CFO John Gerspach on a Tuesday morning conference call with the media, indicate that large financial market dealers are continuing to prepare contingencies to insulate themselves from a short-term debt default by the U.S. Treasury.

Already, investment managers such as Fidelity and Reich & Tang have said they no longer hold Treasuries of a similar maturity. Citigroup, however, is among the biggest holders of Treasuries in the financial sector. It also is a primary dealer of new government debt issuance, including a worse-than-expected auction of one-month bills last week that caused the U.S. Treasury yield curve to invert through about mid-2015.

Gerspach did say that while the bank is managing its Treasury holdings to reflect the risks raised by an impasse in Washington, he still expects that the government won't default on its obligations.

On Tuesday, Citigroup reported a worse-than-expected third-quarter profit as declining revenue was only partially offset by improvements in credit quality and expense reduction.

The third-largest bank reported quarter net income of $3.2 billion, or $1 a share, compared to $4.2 billion or $1.34 a share in the second quarter and $468 million, or 15 cents a share, a year earlier.

Revenue came in at $17.9 billion, down 13% from the second quarter and 30% from the year-ago quarter.

Third-quarter earnings included a $336 million accounting loss due to the fluctuations in the valuation of Citigroup bonds, compared with a loss of $776 million in the prior year. It also included a tax benefit of $582 million. The year-ago quarter included, among other one-off items, a $4.7 billion pretax loss from the sale of a stake in the Morgan Stanley Smith Barney joint venture.

Must Read: Citigroup Third-Quarter Profit Misses Estimates (Update 1)

Adjusted for these non-recurring items, the bank reported third-quarter earnings of $1.02 a share on revenue of $18.2 billion, down from $1.06 a share on revenue of $19.4 billion a year earlier.

Analysts were expecting the bank to report earnings of $1.04 a share on revenue of $18.615 billion. Most analysts exclude CVA/DVA gains and losses from their core earnings estimates.

Shares of Citigroup were losing nearly 1% in pre-market trading.

"We performed relatively well in this challenging, uneven macro environment," CEO Mike Corbat said in a statement. "While many of the factors which influence our revenues are not within our full control, we certainly can control our costs and I am pleased with our expense discipline and improved efficiency year-to-date."

The bank continued to reduce its non-core assets with Citi Holdings constituting only 6% of its balance sheet, down from 7% in the second quarter.

Corbat also pointed to improving capital metrics, with Basel III Tier I Common ratio standing at 10.4% and supplementary leverage ratio increasing to an estimated 5.1%.

-- Written by Antoine Gara and Shanthi Bharatwaj 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
C $46.28 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs