Citigroup May Lose Foreign Fat Cats

Updated from 2:17 p.m. EST

Citigroup (C Quote) could see an exodus of wealthy foreign depositors, now that the U.S. government is taking an ever-larger stake in the tottering giant, says a prominent bank analyst.

Foreign deposits make up roughly two thirds of Citigroup's total deposits, according to the bank's third quarter financial statements. Richard Bove, an analyst with Rochdale Securities, says a large portion of those deposits are people who are trying to hide money from their local governments.

"If you're a rich guy in Venezuela and you want to protect your money, you put it in the Citigroup bank in Venezuela and you can immediately convert it into dollars without question and you can move it into New York without question so that you don't have to worry about whatever Chavez may come up with in terms of a new political alignment," Bove says. "That has always been a major source of deposits for Citigroup all around the world." ...