Make Or Break Point For Citigroup Inc (NYSE:C)

Like the other major U.S. banks, Citigroup Inc (NYSE:C) too failed to meet the Wall Street analyst expectations as far as the earnings are concerned. Moreover, the group also saw its steepest decline in the profits, which hampered the investor’s sentiments as its shares went tumbling. The slate of disappointing earnings over the last year has pushed Citigroup on verge of either make or break point.

Have an analyst breakdown the Bollinger Bands for C.

Failed Stress Test Earlier

The situation becomes more challenging particularly at this point of time when the Federal Reserve has decided to conduct an annual stress test on the bank, which is constantly faltering. Banking industry analyst, Mike Mayo, CLSA, Citigroup Inc (NYSE:C) has come to a point where it either should prove its strength or should be willing to break up the company. The group has already failed to pass the stress test twice in the last three years, and another failure would be could enough to take down the ship.

Mid-March Outcome

Citigroup Inc (NYSE:C) has submitted the required documents earlier this month and may get its results out by mid-March. Stress tests are conducted by the Federal Reserve to test the ability of the U.S. big banks to survive an economic downturn. Almost 31 of the U.S. large banks undergo these tests to estimate the quantum of money they keep to sail through a severe economic crisis.

In the previous year, the Federal Reserve had warned Citigroup Inc (NYSE:C) of its too far-fetched projections. The regulator had mentioned that the bank had not shown any sufficient improvement to fix its earlier identified gaps, which in turn, hampered its ability to forecast losses accurately. Surprisingly, Citigroup Inc (NYSE:C) was the only large bank among all, which failed the test despite having $1.8 trillion assets. It could only be expected that the group may do its best to avert the worst that is looming in its future right now.

About the Author

Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.

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