Citigroup: Financial Winners & Losers

Citigroup was upgraded to outperform at Oppenheimer, sending shares nearly 4% higher.
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NEW YORK (

TheStreet

) --

Citigroup

(C) - Get Report

was among the winners of the financial sector Wednesday after the bank was upgraded to outperform following a recent drop in its share price.

Citigroup

shares were up 4% after Oppenheimer analyst Chris Kotowski upgraded the bank stock to outperform from perform, arguing that Citigroup is now attractively priced after its recent pullback. Kotowski has a $4.58 price target on Citigroup.

"While Citi's dreadful credit experience in the past several years has dearly cost shareholders with debilitating dilution caused by the six-fold increase in share count as a result of repeated re-capitalizations, the company's asset quality and capital ratios now look fine by comparison to peers," Kotowski wrote in his research note.

In separate

Citigroup news

, the Qatar Investment Authority, a sovereign wealth fund, has expressed interest in buying part of the U.S. Treasury's stake in Citigroup,

The Financial Times

reports, citing people familiar with the matter.

The QIA's interest in Citigroup could potentially boosting efforts to sell the shares amid the global rout in banking stocks, as other cash-rich state funds are shying away from banks, often because of big losses on such investments in the past, the

FT

reports.

Additionally,

The Wall Street Journal

reports that Citigroup, along with

Bank of America

(BAC) - Get Report

and

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.

Citing recent

Federal Reserve

data, the

Journal

reports that the three banks reduced borrowing in the repurchase market by an average of 41% over 10 quarters. Reducing short-term borrowing ahead of the end of a quarter is not illegal, although the

Securities and Exchange Commission

is considering new rules that would require increased disclosure of such practices, the report adds.

Goldman Sachs

(GS) - Get Report

,

Morgan Stanley

(MS) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

have not regularly cut short-term borrowing ahead of the end of each quarter, the

Journal

added.

Citigroup share were lately up 3.8% to $3.92. Among the other major U.S. bank stocks, Bank of America rose 1.4% to $15.70 and Morgan Stanley climbed 2.8% to $26.83, while JPMorgan slipped 0.1% to $38.91 and Goldman Sachs dipped 0.4% to $141.95.

Elsewhere,

American International Group

(AIG) - Get Report

rose 1% after prepared remarks show that AIG CEO Robert Benmosche will tell the Congressional Oversight Panel that the insurer "is now on a clear path to repaying taxpayers." Congressional Oversight Panel Chairwoman Elizabeth Warren said in her remarks that AIG "was a corporate Frankenstein."

Still, AIG shares were up 1.2% to $34.89.

Among other analyst actions, Morgan Keegan upgraded

Zions Bancorp

(ZION) - Get Report

to outperform, arguing that the regional bank's credit and dilution issues are in the past. Shares of Zions were up 3.6% to $23.93.

Mortgage insurance stocks were also trading higher following a report that new home sales jumped to 504,000 in April from 439,000 the month prior.

The PMI Group

(PMI)

climbed 7% to $4.13,

Radian Group

(RDN) - Get Report

rose 4% to $9.05, and

MGIC Investment

(MTG) - Get Report

was up 2.8% to $8.84.

-- Written by Robert Holmes in Boston

.

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