Traders Cooperative

[Joe Stocks]

Analyst Raises Doubts About Citigroup Dividend
By ERIC DASH
A longtime banking analyst said late last night that Citigroup may be forced to cut its dividend or sell assets to stave off what she said was a $30 billion capital shortfall, moves that could pull down its shareholder returns for several years.

The analyst, Meredith A. Whitney of CIBC World Markets, downgraded Citigroup’s stock to sector underperform, from sector perform, and called for the bank to bring precariously low capital levels more in line with its peers.

“We believe the stock will be under significant pressure and could trade in the low $30s,” she wrote. That would be as much as a 28 percent decline from yesterday’s $41.90 closing price for Citigroup shares.

If correct, the findings could be yet another blow to Citigroup’s chairman and chief executive, Charles O. Prince III, who has endured a barrage of criticism in the last few years for his failure to control costs and improve results. A 57 percent earnings drop in the third quarter, when both its big investment banking and consumer operations suffered heavy losses, raised doubts about his attention to risk management and his ability to lead the company.

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http://www.nytimes.com/2007/11/01/business/01citi-web.html?ei=5087&em=&en=55f911cb1c02e130&ex=1194062400&pagewanted=print