We all remember the melt down of Bear Stearns. Other banks are trying to stay afloat by selling off assets. Yesterday Citigroup announced it would sell of some $400 + Million in assets.
Global banking giant Citigroup Inc, which has been battered by the subprime crisis, plans to sell assets worth $500 billion in the next two to three years.
Revealing Citigroup’s future plans to investors and analysts today, its India-born CEO Vikram Pandit said that many of these assets have attractive prices and the company is looking for risk reduction.
“We continue to believe in the right economic interest for the company,” he said during a conference call with investors and analysts today.
In the last two quarters, Citigroup has lost more than $14 billion primarily due to the US subprime crisis.
Earlier, Citigroup had posted 48 per cent drop in revenues at $13.22 billion during the first quarter ofthe current year, largely driven by significant write-downs in sub-prime related direct exposures in fixed income markets and highly leveraged finance commitments.
Little mention has made the headlines concerning our smaller banks. Apparently, those who aren’t housed on Wall Street don’t get the same coverage. However, many banks have thrived on Main Street, not Wall Street, until recently. We are beginning to see that some of them are failing… without the big Fed bail out that Bear Stearns enjoyed.
This week it was reported that former Fed Chairman Alan Greenspan announced that in his view, it seems the worst is over. It may be over as far as Wall Street is concerned, but still no one is looking at Main Street… or our smaller more local banks.
Federal regulators says they’ve closed ANB Financial National Association banks after discovering “unsafe and unsound” business practices there.
David Barr, a spokesman for the Federal Deposit Insurance Corp. says many customers served by the bank’s nine locations had accounts under $100,000, which will be fully insured by the government. Barr says customers can continue to write checks and draw money from ATMs through the weekend.
Barr says Pulaski Bank and Trust Co. agreed to assume control over ANB Financial’s bank locations, which will be open Monday.
As of Jan. 31, federal regulators say ANB Financial had about $2.1 billion in assets and $1.8 billion in total deposits.
It was the third closure this year of an FDIC-insured bank. Douglass National Bank, a Missouri bank with $58.5 million in assets, was shut in January; another Missouri institution with assets of $18.7 million, Hume Bank, was shut down in March.
Both were dwarfed in size of ANB Financial, where regulators found lax lending standards, mostly for construction and development loans for projects in Utah, Idaho and Wyoming, as well as Arkansas.
These smaller banks are finding that they, like the big boys, are caught up in the subprime mortgage fiasco. While Citigroup and others can sell of their expansive assets, the smaller banks are left to sink or be closed by the FDIC.
Okay… so we are talking about three banks… so far. And, don’t think the Fed isn’t watching.
Observers have been watching for signs of bank distress resulting from the mortgage crisis. Profits at federally insured U.S. banks and thrifts plunged to a 16-year low in the fourth quarter as institutions set aside a record-high amount to cover losses from sour mortgages.
Are there other small banks on the brink of failure? More than likely.
The FDIC is planning to beef up its staff, including temporarily hiring up to 25 retired FDIC employees who worked in the agency’s more than 200-person division that handles failed banks. They will handle an anticipated increase in bank failures.
Think about what that means for Main Street and Elm Street and Oak Road… and your street.
