Updated with stock price moves
NEW YORK (
was among the losers of the financial sector Wednesday after an Abu Dhabi fund alleged that the bank engaged in "fraudulent misrepresentations" in connection with its stock sale.
said the claim filed by the Abu Dhabi Investment Authority against the bank, which seeks to either terminate an agreement to buy $7.5 billion worth of Citigroup stock or receive damages of more than $4 billion, is "entirely without merit."
Abu Dhabi invested $7.5 billion in Citigroup in November 2007 and the fund received equity units that paid a high annual dividend, although the deal now appears costly for the Middle Eastern fund. The units were to be converted into Citigroup common stock at up to $37.24 a share between March 15, 2010, and Sept. 15, 2011, giving the fund a 4.9% stake in Citigroup.
Earlier this week, Citigroup reached an agreement with the U.S. government and its regulators to pay back $20 billion it received in bailout funds. As part of the repayment, Citigroup said it will immediately issue $20.5 billion of capital and debt, made up of $17 billion of common stock, with an over-allotment option of $2.55 billion.
reported that Citigroup's stock offering will likely be completed Wednesday, with word it would price around $3.30 to $3.35 a share.
In other Citigroup news,
The Washington Post
reported that the U.S. government quietly agreed to forgo billions of dollars in potential tax payments from Citigroup as part of the bank's plan to repay $20 billion in funds from the Troubled Asset Relief Program, or TARP.
The Internal Revenue Service Friday issued an exception to long-standing tax rules for the benefit of Citigroup and a few other companies partially owned by the government, the paper reported. As a result of that exception, Citigroup is allowed to retain billions of dollars worth of tax breaks that otherwise would decline in value when the government sells its stake to private investors.
Citigroup shares were lately down 10 cents, or 2.8%, to $3.46.
were also among the losers of the sector, dropping 10.2% to $1.06 and 10.1% to $1.33, respectively, after
The New York Post
reported that their regulator is renegotiating their financing play with the Treasury Department and may seek an increase to their $400 billion lifeline before the end of the year, citing to people familiar with the situation.
In other bank news, Collins Stewart analysts said that following
Bank of America's
credit card metrics report for November, released Tuesday, they believe that charge-offs will remain under pressure over the next several quarters. They also expect losses to rise steadily, although they say loss levels will remain fairly manageable, barring any unexpected jump in unemployment.
Bank of America shares were climbing 0.5% to $15.26.
Elsewhere, Credit Suisse increased their 2010 earnings estimate for
following the bank's capital raising actions. The firm upped their 2010 estimate to $2.15 a share from $2, compared to the average analyst estimate for $1.80, according to Thomson Reuters.
Wells Fargo shares were higher by 0.3% to $25.74.
also traded higher after reporting monthly activity for November. E*Trade said total daily average revenue trades for November were 170,300, a decrease of 13% sequentially and 22% from the year ago period. However, E*Trade's home equity portfolio saw special mention delinquencies decline by 8% over the last two months, while total at-risk delinquencies declined by 5% during the same time period.
TD Ameritrade late Tuesday said it saw an average of 370,000 client trades per day in November, up 5% from a year ago but down 12% sequentially. The company did say that it had approximately $309.8 billion in total client assets at the end of November, up 36% from a year ago and 4% sequentially.
E*Trade gained 4% to $1.67, and TD Ameritrade rose 1.8% to $18.58.
Several analysts altered ratings of financial stocks Wednesday. Deutsche Bank upgraded
to buy from hold and raised its price target to $25 from $18. Shares gained 4% to $18.05.
Elsewhere, Wells Fargo initiated coverage of
with a market perform rating and
with an outperform rating. Capital One shares tacked on 0.1% to $40.11, and American Express was up 0.8% to $41.28.
Morgan Stanley analysts also initiated coverage of several financial stocks. The firm initiated coverage of
with underweight ratings, and Charles Schwab,
and TD Ameritrade with overweight ratings.
Morgan Stanley also initiated coverage of
with a rating of equal weight.
-- Written by Robert Holmes in Boston
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